The financial services industry is everything that goes into securing and supporting the purchase of economic goods, such as mortgages, investments, insurance policies and even credit cards. It includes depository institutions, providers of investment products, insurance companies and other credit and financing organizations as well as the critical financial market utilities that support them.
A strong financial services sector is vital to the health of a country’s economy. It leads to increased confidence and purchasing power for consumers, enabling businesses of all sizes to thrive. It also helps people save for larger purchases and manage risk more effectively. However, if the financial services sector begins to weaken, the entire economy suffers.
Whether consumers are saving for a new home or investing in the next great technology, they depend on financial services to put their money to work. Instead of stashing cash under their mattresses or investing in jewelry, families can deposit their savings with a financial institution where it’s secure and safe, earns interest and is readily available when they need to use it.
Financial services also help investors maximize their returns. Rather than investing in a single stock, they can buy shares in a range of companies through mutual funds and exchange-traded funds (ETFs). They can also borrow to invest, leveraging the capital of other lenders, such as private banks, through hire purchase finance or bank loans.
The financial sector is also responsible for providing the credit facilities that enable businesses to expand and create more jobs. This can be through lending to small and medium enterprises, or by facilitating the purchase of equipment through hire purchase or leasing.
In addition to lending, financial services can also help a company improve its efficiency by helping it to manage the risks associated with running a business, reducing the need for costly and time-consuming internal audits. It can also provide a range of other support, including accounting and tax filing services, debt resolution and payment processing providers, as well as global money transfer systems and merchant accounts.