What Is Financial Services?
The term Financial services encompasses a wide variety of business sectors. The industry includes deposit-taking, loan and investment services, securities (either as agents or brokers), credit intermediation, asset management, insurance, and any other activity related to the redistribution of risk.
Financial services are essential to the functioning of any economy. Without them, individuals would have a hard time finding those with money to save to cover their risks, and those who need to borrow wouldn’t be able to do so. Financial services are also crucial for enabling people to achieve their financial goals, whether it be saving for retirement, purchasing a home, or investing in stocks and bonds.
Banks are one of the most familiar forms of financial services, and they’re often considered to be the backbone of the industry. They provide checking and savings accounts, credit cards, mortgages, and other loans to consumers and businesses. While they primarily earn revenue through the spread of interest rates between loans and deposits, they also offer other financial services like cashing checks and notary services.
Other categories of financial services include debt resolution, a service that helps consumers manage and pay off their unsecured debt; reinsurance, which is purchased by companies to reduce the impact of catastrophic loss; and brokerage services, which buy and sell securities on behalf of clients. As the field continues to grow and change, it’s important for people interested in a career in finance to understand how these different categories are related.