When you think of financial services, you might picture banks, brokers and mortgage lenders. But this vast industry encompasses a lot more than that. It includes securities traders, investors, financial advisors and Wall Street firms. And it doesn’t just help individuals; it provides small businesses, large companies and even government agencies with the necessary resources to achieve their financial goals.
The term financial services refers to all activities that involve the inflow and outflow of money. Business entities engage in financial activities when they sell stocks and make debt repayments, while governments participate in such activities when they levy taxes to further specific monetary objectives. Individuals also engage in financial activities when they buy consumer goods, like a house or an automobile, and when they use their savings to invest in financial products like retirement accounts or mutual funds.
It wasn’t long ago that each sector of the industry more or less stuck to its niche. Banks offered checking and savings accounts, loan associations provided mortgages and credit cards, and investment agencies sold equity and debt to investors. Now, however, many banks offer a suite of consumer and business banking products; brokerage firms sell both bundled investment products and individual stock brokerage services; and private banking firms cater to high net worth clients with complex needs.
The proliferation of technology has changed the way these firms do business. Instead of only offering a handful of products, they now work to anticipate the pivotal moments in their customers’ lives—like a new job, marriage or the purchase of a home—and provide them with the right product at the right time.