Financial services are the activities and companies that help consumers, businesses and governments manage their finances. They include payment processing, credit, insurance, banking and investing. It’s important to choose the right financial service providers to meet your needs. Some examples are hiring an accountant to help you keep your personal finances in order and working with a financial advisor to develop a comprehensive investment portfolio.
Before the 1970s, the financial services industry was pretty much limited to its own specialties. Banks provided checking and savings accounts, while loan associations offered mortgages and car loans. Insurance companies provided life and property insurance, while stock brokerage firms helped people invest in stocks and mutual funds.
Today, the financial services industry seems to be all-encompassing. But it wasn’t always this way. Before, each sector of the industry stayed relatively separate.
Financial services are crucial to a country’s economy. They provide the means for families to purchase food, clothes and shelter, as well as the capital needed to start or expand a business. These sectors also support the secondary and tertiary economies in a country.
Many developing countries face challenges when it comes to accessing financial services. In some cases, this is due to price barriers such as high interest rates or fees. However, in other instances, it is a result of non-price barriers such as the lack of financial institutions in rural areas or the strict documentation requirements to open an account.