The Financial Services Sector
Financial services encompass a vast range of activities that are central to the economy. The industry includes banks, mortgage lenders, investment firms, securities traders, and insurance companies. It also includes a number of professional services such as accountancy and translation and interpretation.
The term “financial services” is also sometimes used to refer to the entire range of miscellaneous support that a business might need, such as legal counsel or an IT consultant. This type of work is more properly classified as part of the Business Services sub-sector.
Banks are the foundation of the financial services sector, mainly concerned with direct savings and lending. They earn revenue primarily through fees, commissions and the spread between interest rates charged to depositors and rates paid on loans. Investment banking is a major service, providing advice to both public and private companies on mergers and takeovers. Structured finance focuses on developing intricate (typically derivative) products for high net worth individuals and institutions with more complicated financial needs.
Other important players include private equity and venture capital providers who supply investment funds to businesses in return for ownership stakes or profit participation. Insurance is another key subsector, providing coverage against risk of death or injury (life insurance, health and disability income insurance), property damage or loss (home and auto insurance), and liability or lawsuit (personal lines insurance).
Because of the wide range of roles in this sector, many employers seek applicants with a variety of education and experience levels. However, a degree is not always necessary, especially for entry-level positions such as customer service representatives or loan officers. The industry is known for promoting from within based on merit, and employers are often willing to provide on-the-job training to help new hires gain the skills needed to advance.