The Financial services sector is a large and diverse category of institutions, activities and products that are essential for the development and growth of economies. It includes thousands of depository institutions, providers of investment products, insurance companies, other credit and financing organizations, and critical financial utilities that support these functions.
A service is a task performed by someone, usually for a fee. It may be a simple transaction, such as cashing a check, or it could involve complex and long-lagged processes like arranging a mortgage loan.
Some of the most common kinds of services include accepting deposits, making loans, administering payment systems, and trading, selling, or issuing securities and foreign exchange. Others include managing assets, providing advice, and offering retirement planning.
Financial goods are the tangible things that people own, such as stocks, bonds, loans, commodities, real estate, and insurance policies. These goods last beyond the time when consumers purchase them, and they are the foundation of economic growth.
The financial services industry is undergoing a transformation that is similar to the transformation that has occurred in other industries. It is moving from a “one-stop shop” model to a network of distribution platforms, new product providers and alternative sources of capital that can compete at different points in the value chain.
The changes will mean that banks and insurers need to work out how to offer their customers a platform for acquiring, buying, and supplying a full range of services. They will also need to think about how they can in-source from other firms and create new client offerings.