Financial services include a wide range of different businesses that provide economic services to their customers. These businesses include credit-card companies, banks, and credit unions. They also offer a variety of insurance products. Getting the right information about these businesses is essential to making the right choice when choosing a job in this field.
In financial services, retail banking is a large part of the overall business. It represents 50-75% of a bank’s revenue. Therefore, large banks have a special stake in its development. Large banks have invested heavily in their retail banking infrastructure, which enables them to compete with smaller local institutions.
The main role of retail banks is to provide loans for a wide range of purposes. These loans include consumer loans, mortgages, and vehicle loans. They also offer credit cards, which have made the process of paying for purchases and merchandising easier and more convenient.
Commercial banks provide essential services to consumers, such as processing customer payments and providing safeguards against fraudulent transactions. They also help businesses exchange foreign currencies and offer services such as lockboxes, which let customers send money directly to a business’ account. They also provide professional services such as collecting checks, paying bills, and paying interest and insurance premiums.
Increasing interest rates and improving economic conditions have fueled the growth of the Commercial Banking industry. This sector earns most of its revenue from interest spreads. Banks receive deposits and place them in various products, such as savings and checking accounts, and investment products. They pay interest on these deposits to attract depositors and provide higher interest rates for loans. This is known as net interest income and is the primary source of profit for commercial banks.
Investment banking is a field in which professionals perform the sale, purchase, and financing of securities. Deals are typically executed by small teams of four to six bankers, including an analyst, an associate, a vice president, and a lead managing director. Analysts develop deal materials and submit them to the managing director for approval. The managing director has the final say on all deal material. In some cases, associates may work with bankers from other groups as part of a larger team.
Investment banks earn their profit by charging fees or commissions for their services. These services typically involve the sale of stocks, bonds, or other securities. These may be an initial stock offering or a public offering. An underwriting process is often used to bring a new security issue to the public. The bank guarantees the price for a certain number of securities and also bears the risk of issuing them.
Insurance is a major subsector of the financial services industry. These services protect people and businesses from injury, death, and loss of property. Additionally, they protect against liability and lawsuits. The insurance industry employs several different types of professionals. There are insurance agents, brokers, and underwriters. An agent represents the insurance carrier; a broker represents the insured. A broker shops for the best insurance policy for a client. An underwriter assesses the risk of insuring a client, and an insurance broker shops around for the best insurance rates. Also, reinsurers purchase insurance to protect insurers from catastrophic losses.
Another sector of financial services is asset management. Asset management firms manage various types of assets, including pensions, insurance assets, and hedge funds. While some of these financial products are exclusive to one sector, there are some that are available to everyone.