A healthy financial services sector is a vital part of any economy. It helps people get the money they need for mortgages, college educations, and vehicles; saves for retirement and other goals; and protects assets from loss through insurance. It also provides the capital that businesses need to grow. This sector encompasses a wide range of companies including banks, investment firms, credit unions, credit card companies, and insurance agencies. Many of these are for-profit enterprises, but others, like credit-card networks and community-based nonprofits that provide counseling services and money management advice, are not.
There are numerous jobs available in this field, and the career options are diverse and rewarding. Many people who work in financial services enjoy a fast-paced, exciting environment where they meet new and interesting people on a daily basis. The pay is generally higher than in most other industries, and the opportunity to advance quickly is often available.
In the broadest sense, all economic activity that involves moving and changing money falls under the umbrella term “financial services.” This includes everything from depositing and withdrawing funds to trading securities. The most common members of the financial services industry are banks, which accept deposits and make loans; invest savings with a view to making a profit; and redistribute risk by aggregating money from many depositors so that they are not crippled by the failure of one or two borrowers. But it also includes brokerage houses, investment banks, credit unions, and even some private equity funds and angel investors who supply venture capital to technology firms in exchange for ownership stakes and a share of future profits.
The financial services industry is incredibly interconnected, and this complexity leads to high levels of regulation. This is because governments want to ensure that borrowers and lenders are treated fairly, and that there is sufficient trust to enable the financial system to function. To this end, they regulate licensing, supervision, and enforcement, which varies by country.
Because of the importance of financial services, a lot of the work that goes on in this sector is secretive and complex. But some things are not: consumers must have confidence in the financial system, and they must know that their assets are secure. They must believe that their bank will be around when they need it; that the stock market will not crash; that they can trust their insurance provider to pay claims in a timely manner; and that their life or home will not be destroyed by natural disaster or burglary.
For these reasons, there are few industries where a bachelor’s degree focusing on business administration is more valuable than in the field of finance. This is particularly true in the United States, where a large number of colleges and universities have dedicated business programs. Many of these programs are designed to prepare students for careers in the fields of investment banking, corporate finance, and hedge fund management. Moreover, there are several other highly specialized degrees that can lead to positions in credit rating agencies, private equity firms, and asset management companies.