Financial services is a vast industry that encompasses many types of businesses and occupations. It includes depository institutions, providers of investment products, insurance companies, credit and lending organizations, as well as the critical financial utilities that support these functions.
The most essential service provided by this sector is money management. It involves the pooling of savings from depositors to lend to individuals and businesses that need capital. Financial services also include securities underwriting and brokerage, payment and money transmission, custodial and trust services, clearing and settlement services for financial assets and negotiable instruments, and advisory and intermediation services.
Banking is another important component of the financial services industry. Retail or consumer banking focuses on individual consumers, offering accounts, loans and other financial products tailored to the needs of each customer. Commercial or business banking, on the other hand, provides similar services to small and large corporations. It is also possible for a bank to specialize in the management of a particular type of asset, such as hedge funds or mutual funds.
The latest pandemic and ongoing racial injustice events have raised awareness about the need for financial institutions to make a global commitment to advance financial inclusion1. This includes providing access to useful, affordable financial products and services that promote growth by encouraging investment, production and saving. A key challenge for the industry is increasing customer acquisition and retention, which is difficult given widespread ignorance of financial products and basic money management skills.