The Financial Services Sector – The Backbone of a Strong Economy

A healthy financial services sector is the backbone of a strong economy. It helps people buy homes, cars and education with loans; it allows families to save for retirement and other goals with bank accounts and savings vehicles; it safeguards assets like property and health through insurance policies and helps businesses grow with investment funds. The thriving industry also employs millions of workers with solid, well-paying jobs.

Financial services are crucial to the economy because they provide a link between those who have money to save and those who need it to spend, making it possible for both groups to meet their needs. They include depository services, such as banks that accept deposits and offer checking and savings accounts; credit unions that lend money to individuals; loan associations and mortgage companies that supply home and car loans; and investment firms that sell stocks, bonds, mutual funds and other investments.

The sector has a broad scope because a number of different industries offer financial services. The most recognizable of these are banks, credit card companies and investment firms. Some of these are quite large and even global in scope, while others are specialized or focused on one particular type of financial service.

Until recently, most of these companies more or less stuck to their niches. However, now it’s common for a company that offers just one type of financial product to branch out into other areas. For example, a firm that only offers mortgages might expand its offerings to provide small business loans. Banks, for their part, now offer investment opportunities and other services that they couldn’t have dreamed of offering only a few decades ago.

These days, it’s difficult to imagine an economy without a robust financial services sector. But the fact is that nearly 2 billion people lack access to such vital services, whether because they can’t afford to pay for them or don’t have any way to store and manage their money. Without these services, they can’t get the credit they need to make major purchases or start businesses; they can’t safeguard their property and health through insurance; or they can’t even save for the future by having a place to put their money.

As the world becomes more connected, many of these companies are taking on new roles as ecosystem catalysts. They’re partnering with other players—including fintechs, digital giants expanding into finance and other industries, and new entrants from outside the industry—to create innovative solutions for broader societal challenges. They’re also working to build a more holistic approach to customer relationships and deliver value by connecting with customers in more personalized, tailored ways. This requires a shift in mindset and culture, as well as an embrace of new technologies that can help them deliver on their promises to their customers.

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