A healthy financial services sector allows people to get loans for mortgages, cars, education, and many other things. It also helps businesses expand and grow by supplying them with the funds needed to make big investments or acquisitions. It also acts as a safety net for individuals by providing them with insurance coverage against unforeseen circumstances like sickness or accidents.
The financial services industry comprises a vast range of institutions and professionals who work to provide products and solutions that meet the complex needs of consumers, investors, and businesses alike. Some of the most common types of financial services include credit unions, credit card companies (e.g. American Express), banking institutions, private equity firms, and investment funds.
Banks and other financial institutions are the backbone of the financial services industry. They perform many tasks, but the most important ones are collecting deposits in the form of checks and savings accounts and lending money to those who need it. Financial institutions evaluate the creditworthiness of borrowers and determine interest rates before making a loan.
Financial services are a lifecycle business, which means that it’s critical for banks to understand the financial needs of their customers at different points in time. For example, when someone gets married or buys a home, they likely need to invest in life insurance. Banks can predict these major milestones by analyzing customer data and creating tailored products that will be of value at those times.