Financial services is an industry that combines a range of businesses and activities that manage money. These include credit unions, banks, mortgage companies, insurance firms, accountancy companies, consumer-finance companies, stock brokerages and investment funds, as well as some government-sponsored enterprises.
Banks act as the middlemen between depositors and borrowers, collecting deposits from people with money and lending it to people who need it. The money is usually repaid back to the banks, plus interest. The banks earn their profits on the spread between loans and deposits.
Advisors provide a wide variety of financial services to both individuals and organizations. They can help with due diligence on investments, provide valuation services for businesses or aid in real estate endeavors.
Unlike some other industries, financial services don’t produce products like stocks or bonds, but they are involved in making and managing those goods. They may also offer risk-sharing services, which channel cash from savers to borrowers and redistribute the risks involved in investing.
Many people understand the concept of insurance; it is a system that you pay into on a monthly or annual basis which acts as a safety net and helps cover some large expenditures that you may not have foreseen. It covers things such as health, auto, home and life insurance.
To be successful, financial services firms must focus on lifecycle-based products and services that are right for their customers at a particular stage in their lives. This is done through data analysis and using insights to anticipate what customers are going through, which then enables them to provide the right product at the right time.