Financial services are the industries that provide money management to individuals and businesses. This includes everything from the companies that process bank transactions, like teller jobs or cashing checks to those who offer investment services such as mutual funds. The term financial services also extends to a variety of other enterprises, such as debt resolution companies, credit card networks and global payment systems. In addition, there are many types of insurance that fall under the umbrella of financial services. These include auto, health and life insurance.
As a whole, the financial services industry is quite vast. The following are the broad categories that most people think of when they hear the phrase “financial services.”
Banking Services – This includes everything from checking and savings accounts to credit cards and electronic transfer systems. It even extends to lending money by way of mortgages and loans. A big part of this category is the services provided by commercial banks to businesses, such as underwriting debt and equity for companies seeking to raise capital and advising on mergers and takeovers.
Investment Banking Services – This is where the rubber meets the road for the financial services industry, as it deals with providing money to companies that are looking to expand through the sale of shares or debt, or by creating new products, such as structured finance. It is this area that has seen much consolidation as the result of the market collapse in 2008 and the Gramm-Leach-Bliley Act of the late 1990’s, which forced many banks to buy out their competitors in order to remain competitive and profitable.
Insurance Services – This is probably the most common of all of the services that are considered to be part of the financial services industry. This is the service that most people are familiar with, whether it be auto insurance, home insurance, health insurance or life insurance. Basically, it is a way to help cover costs that may be incurred due to unforeseeable events.
Debt Resolution Services – This type of service helps consumers with overwhelming debt by negotiating with creditors on their behalf in an effort to reduce or eliminate the amount they owe. It is sometimes referred to as debt management or consumer debt counseling.
Business Services – This is a broad category that encompasses a number of different types of assistance that a business might need, such as accounting services, tax filing or credit card processing. In addition, this is the category that would contain the various exchanges and clearing houses that help facilitate stock, derivative and commodity trades.
Some of the biggest names in this category of financial services are conglomerates that own and operate in more than one sector of the market. For example, a major bank might own a large insurance company and an investment firm. Usually, they will keep the original brands of each company, but they might combine the marketing and advertising efforts in an attempt to become more competitive. Outside of the United States, this is not as common, as most countries only allow for a single holding company for each type of financial services company.
