What Are Financial Services?

Financial services are a broad category of industries that include investment banking firms, money managers, brokerages, banks, lenders, insurance firms, tax and accounting firms, credit card companies, payment processing firms, real estate, and fintech (financial technology) companies. They provide consumers and businesses with a wide range of products and services, including investing money, obtaining loans, and managing debt. They also provide risk management, such as insurance against property loss or injury (e.g., life, health, and property insurance), against bankruptcy, and against liability lawsuits.

Business process management (BPM) solutions are a vital part of the financial services industry, as these technologies help organizations to manage the complexity and speed of the business processes that support financial services operations. Infosys BPM solutions empower financial service providers to drive digital transformation across all customer facing processes and improve their business agility and responsiveness to changing consumer needs, regulatory requirements, and market dynamics.

Some examples of financial services are:

Financial services enable individuals and businesses to obtain the financing they need to invest in productive assets. The financial sector is a major contributor to world GDP and plays an important role in the economy by providing the necessary capital to grow businesses, build infrastructure, hire workers, and purchase consumer goods. In addition, financial services are a vital component of the global economy, as they enable international trade and facilitate foreign investment. While the use of financial services is a fundamental necessity for every country, not all people and companies utilize them. Some avoid financial services for a variety of reasons, such as cultural preferences or lack of promising investment projects. This group of nonusers, however, does not constitute a significant problem since they are able to obtain the funds they need from other sources and thus do not significantly constrain economic growth. Other consumers do not use financial services because they are either unaware of their availability or prefer to deal in cash. Still others simply do not need them, either because they are wealthy enough to avoid requiring investments or because they have no pressing financial problems. This last group does not represent a serious barrier to growth, as it is easy for governments to introduce affordable financial services in the event that their economies experience an investment gap. Finally, some people do not use financial services because they are unwilling to pay the required fees or are unable to meet minimum requirements such as income levels. The first two types of nonusers can be addressed by government policies promoting awareness of financial services and making them more affordable, while the latter is a matter for individual choice. A government could, for example, offer a loan guarantee to encourage the establishment of new banks. It could also relax restrictions on capital gains to encourage investors. This, in turn, would lead to increased savings and improved economic growth. However, such policy changes require careful analysis of the costs and benefits and of alternative policies.