Financial services are the cornerstone of a healthy economy, enabling consumers to spend, save and invest money securely, businesses to expand into new markets and companies to borrow cash for operations. Globally, the sector is worth approximately $24 trillion. But financial firms face stiff competition, thin margins and must comply with stringent regulations. They also struggle to cope with rapid changes in customer needs and technology advances, making them vulnerable to fraud.
Financial institutions include depository banks, investment firms, credit and lending organizations, insurance companies and other credit and financing firms. The sector also includes credit card networks and exchanges, as well as debt collection and bankruptcy services. It is a huge industry, encompassing thousands of for-profit companies as well as many community-based nonprofits that provide counseling and debt relief.
In the past, each sector of financial services stayed within its own niche. Banks only offered checking and savings accounts, for example, while loan associations concentrated on mortgages and other loans. But beginning in the 1970s, consumer demand drove the lines between financial services sectors to blur. Banks began offering investments, mutual funds and other financial products; brokerage companies offered both stock and bond trading; credit card companies like Visa and MasterCard provided the cards that helped people build their spending power; and private equity and venture capital providers supplied investors with opportunities to take a stake in emerging growth companies.
The presence of these companies promotes economic dynamism. Consumers are able to purchase various consumer products like cars and houses through hire purchase and leasing and the housing finance companies. Investors can acquire shares in different companies through the capital market and these stocks help the companies to raise sufficient funds for business expansion and production. Similarly, the government can raise short-term funds through the money market.
One of the most important aspects of a country’s economy is its financial sector, which includes banks, credit unions and credit-card companies. The health of the sector is a good indicator of the health of an entire country’s economy. A strong financial sector typically indicates a robust economy, while a weak one may indicate an oncoming recession.
A career in the financial services industry can offer lucrative compensation, especially in major cities. But it can also be stressful and incredibly demanding, with high levels of stress and burnout common among employees. Moreover, many jobs require extensive travel and long hours. Employees often work 16 to 20 hours a day, and it is difficult for them to maintain a work-life balance. Moreover, a career in the financial services industry requires intense study and preparation, and it can be very difficult to break into the field without a degree. A bachelor’s degree is generally required to work in the banking industry, while an advanced degree is needed for many other positions. But an associate’s degree can provide a path into the financial services industry as well. In fact, some companies will hire an associate to handle administrative tasks, while a teller will only be hired for customer service roles.