Financial services are a part of the economy that encompasses banks, investment companies, insurance firms and mortgage lenders. They serve individuals, businesses and even governments as they help them finance their various projects. When the sector is healthy, it helps boost overall economic activity. Besides, it also plays an important role in providing a platform for people to invest their savings.
In the modern day, it is not uncommon to hear about large corporations forming multi-service financial conglomerates. It is this phenomenon that has helped shaped the industry as it is today. However, this was not always the case. Earlier, the industry was largely compartmentalized with each sector staying true to their specialization. Banks offered checking and savings accounts, loan associations provided mortgages and loans, while brokerage companies traded stocks and bonds.
As the industry grew, it was eventually inevitable that the sectors would start to overlap. It was the 1990s that saw the most dramatic change, with banks being allowed to offer investment, commercial banking and insurance services thanks to the Gramm-Leach-Bliley Act. The same decade also saw credit card companies offering more than just payment services, as they entered the market with a host of innovative products.
A good example of how financial services enable the diversification of funds is the hiring of angel investors. These are independently wealthy individuals looking for small and mid-sized business ventures that they can invest in in return for a stake or profit participation. This is a great way for new businesses to gain capital and grow their operations.
The other way financial services can diversify a company’s assets is through hire purchase financing. This allows an individual to acquire consumer products such as automobiles, computers and television sets with the assistance of a financial institution. This can be a great way for someone to get the products they want without spending their own money right away.
Despite the fact that there are many benefits of working in financial services, there are also some downsides. For starters, the stress can be tremendous and work-life balance may be difficult to achieve. In addition, it is not unusual for those in the industry to work long hours. As a result, burnout is a real possibility for those who are not careful.
Another problem is that there are a lot of regulations within the industry. While these are meant to protect consumers, they can sometimes stifle innovation and growth. As a result, those who are considering entering this field need to weigh the pros and cons carefully before making any major decisions. This is especially important since there are many other career paths that could potentially yield a higher salary. Having said that, the right mix of hard and soft skills can make all the difference in a career in the financial services industry. For instance, a college degree is not always necessary for those who wish to enter the field of investment banking, but an associate’s degree may be adequate for those who are interested in becoming mortgage brokers or personal bankers.