The Financial Services Industry
The financial services industry encompasses a wide range of businesses, including banks, credit unions, and credit-card companies. This industry provides economic services to people around the world. This includes banking, insurance, and credit-card services. Financial services are important to the economy because they help people manage their money. They provide a number of other benefits to consumers as well. The industry includes a variety of industries, so it is important to understand the difference between different types of services.
Financial services include financial institutions, such as banks, credit unions, and financial advisors. These companies handle a wide range of business transactions and can provide advice on investments, debt management, and other financial matters. They also pool cash from various sources to pay policyholders. This allows these companies to reduce risk and provide added value to their members.
The financial services industry is divided into two general categories: personal/consumer and corporate services. Some companies operate across both categories, but many focus on just one category. While many legacy financial institutions have long been in business, they are now facing competition from new and more agile companies. For example, there are numerous non-traditional banks looking to snag market share. These banks offer features such as lower overdraft fees, higher APY accounts, and user-friendly apps.
Another important part of the financial services industry is insurance. These services provide protection for people against accidents, loss of property, and liability. There are many types of insurance, but two of them are important: broker services and insurance agents. A broker works on behalf of an insurance carrier, while an insurance agent represents the insured. They can shop around for the best insurance policies for their clients. Another subsector is underwriting, which evaluates the risk of insuring a client. Underwriters also advise investment bankers on the risk of loans. Finally, reinsurers sell insurance to insurers to protect them from catastrophic losses.