The financial services industry encompasses all roles that manage and exchange money. These include banking, investing, insurance, and financial analysis. Those who work in this sector are crucial to the health of the national and world economy.
A person’s personal finance is comprised of all the decisions they make that impact their finances, including earning income, spending money, saving and investing. The financial services industry helps people to make these choices by providing the tools and resources necessary to do so. For example, a person may need to borrow money to purchase a home or car, and this is where financial services come in.
Financial institutions provide intermediation by collecting funds from savers and lending them to borrowers. They also supply all types of insurance cover and lease financial assets. They generate revenue by charging fees and commissions and the spread between the interest rates charged on credit accounts and those paid on deposits.
Another form of financial services is payment services, which enable companies to accept credit and debit card payments from their customers in return for a small percentage of the total transaction amount. This is an important form of business-to-business commerce and helps to facilitate transactions.
The final category of financial services is asset management, which involves the process of accumulating and managing a collection of assets to meet specific investment goals. This can include everything from managing an individual’s retirement fund to developing more complex investment products for high net worth individuals and institutions with greater investment needs.