Financial services are the economic services provided by the finance industry, which encompasses all sectors that manage and exchange money. This includes banking, investing, insurance, and more. A strong financial sector is essential to a healthy economy, as it helps individuals and businesses obtain the funding they need to grow and thrive.
A key thing to remember about financial services is that they’re not the same as the “financial good” you’re purchasing; rather, they’re the process by which you get it. For example, when you take out a mortgage to buy a house, the financial service that supports that purchase is the loan application, inspection, and appraisal. Similarly, when you pay for an insurance policy, the insurance company that provides that coverage is the financial service.
One of the most important aspects of a healthy financial services sector is intermediation, which means that these companies help channel cash from savers to borrowers and redistribute risk. For example, banks take on the risk that borrowers won’t repay their loans, while at the same time offering depositors a safe place to park their savings. In the same way, insurance companies pool cash from many borrowers to reduce their exposure to risk and to ensure that they can pay out any members who experience a loss.
As with any field, building a successful career in the financial services sector requires hard work and dedication. But don’t let that discourage you; there are plenty of ways to enter the industry – including getting an entry-level job and working your way up.