Financial services include the broad range of activities associated with money management and asset allocation. This sector is home to numerous key players and stakeholders, from insurance providers and payment networks like Visa and Mastercard to accountants and credit rating agencies.
In the past, each segment of the financial services industry stayed within its own niche. For example, banks provided checking and savings accounts, loan associations lent mortgages and automobile loans, while brokerage companies offered investment opportunities in stocks, bonds and mutual funds. Today, the emergence of technology has changed everything. Customers now have the ability to check their bank accounts from anywhere at any time, businesses can pay employees via direct deposit and investors have access to real-time information on market trends through online trading platforms.
As for the specifics of each segment, insurance providers offer protection against the risk of death (life and health), loss of property or assets through accidents or disasters (home and auto insurance), and liability for damages (automobile and homeowners insurance). This category also includes reinsurers who underwrite the policies that insurers sell.
Another important subsector is credit and finance, which includes consumer lending (car loans, student loans and home mortgages), business lending (commercial and industrial loans), and securities and capital market activities. These activities involve stock and bond markets, the issuance of securities, exchange rates and the management of cash flow and capital resources. They are essential to the global economy and to the functioning of most economies.