Financial services are the backbone of a healthy economy. They enable people to save, invest and access credit for large purchases like cars or houses. They also help with debt management and personal finances. The sector is a key driver of economic growth, while a weak one can drag down the whole economy. It’s important to understand how different subsectors of the industry operate so that you can select the best option for your needs.
According to Pocketbook Agency, the financial services industry encompasses “anything that touches money.” The different groups include banks (which offer deposit accounts, mortgages and loans), insurance companies (who provide health, home, auto and life insurance coverage), investment firms (like hedge funds, private equity firms and mutual fund companies) and payment providers (like Visa and Mastercard). It also includes credit rating agencies, credit reporting services, debt resolution, tax preparation and filing services, global payment networks, wire transfer services, currency exchange services and stock and commodity exchanges.
It may seem that the lines between financial services sectors are blurred today, but it wasn’t always that way. Before the 1970s, each sector stuck to its own specialty. Banks offered checking and savings accounts, while loan associations focused on mortgages and personal loans. Brokerage companies focused on stocks, bonds and mutual funds. And credit card companies, like Visa and MasterCard, specialized in the cards themselves.
During this time, the financial sector became more interconnected as technology enabled it to expand its offerings and cater to different market segments. For example, digital apps can help with saving and investing, and online platforms have changed how consumers manage their money. The proliferation of these technologies has increased competition and created opportunities for new players to enter the market.
In addition, stricter regulations have made it harder for some financial institutions to serve their customers. Some have also struggled to adapt to the changing economy. Many are trying to increase customer retention and acquisition through innovative tools and features that help them with debt and money management. Others are expanding into new markets, such as lending to millennials and lowering fees to attract more clients.
A career in the financial services industry can be rewarding and exciting. However, it’s important to keep in mind that these jobs can be stressful. People in some roles work 16 to 20 hours a day, and burnout is a real possibility. Additionally, some positions are highly regulated and require extensive knowledge of the industry’s complex rules and regulations.
To get started in the field, start by building your network and applying for entry-level positions at small and midsize firms. Be prepared for interviews by researching the company and having answers ready to about 100 potential questions. During the process, remember to remain humble and show genuine interest in the job and the industry. If you can break into the field, you’ll be able to find your niche and make an impact. Ultimately, you’ll be doing your part to power NYC and the world’s economy every day.