Financial services are a set of services and products that enable consumers and businesses to manage their money. These include banking, investments, and insurance. The industry is important because it enables consumers to borrow and invest money, which can stimulate growth in the economy and help people meet their goals.
The financial sector includes thousands of depository institutions, providers of investment products, credit-granting organizations (including mortgage and business loan companies), insurance firms, and other credit and financing utilities. It also encompasses private equity and hedge funds, and global payment systems like credit card networks, currency exchange services, and wire transfer networks. Finally, it includes debt resolution services and credit reporting agencies.
These providers intermediate between savers and borrowers. Banks offer checking and savings accounts, and they make loans to individuals and businesses to purchase goods and services. In the process, they redistribute risk by pooling deposits from many savers and then lending it out to a large group of borrowers. This way, they are not crippled if one or more borrowers default.
The industry is facing a number of challenges, including consolidation and regulation. Recent scandals and the market collapse of 2008 have caused some concern about its health. However, the industry is rebounding and has a positive outlook for the future. For professionals in the field, this means more opportunities to learn new skills and develop their careers. For employers, it means the need to provide innovative tools and services that help customers manage their money better.