Financial services are a huge part of our daily lives. They allow us to get the money we need in loans for mortgages, cars, homes and more. They help us save for our futures and they protect our assets from financial loss with insurance policies. A strong financial services sector helps the national and world economies grow, too.
The financial services industry is comprised of depository institutions, providers of investment products, credit and financing organizations, insurance companies, other credit and lending institutions and the providers of critical financial utilities. This sector is governed by independent regulatory agencies designed to oversee different financial institutions and uphold transparency and client protections.
In addition, financial services firms use customer segmentation to develop more targeted products and strategies for their clients. This allows them to offer a more customized experience and increase profits in the process. For example, a credit card company may target customers by their spending habits or the type of lifestyle they live in.
In the past, each area of the financial services sector stayed pretty much within its own niche. Banks offered checking and savings accounts, while loan associations focused on mortgages and auto loans. Today, however, it seems that everything is interconnected. One big reason for this is the trend of consolidation, which occurs when one large financial services firm buys another. The combined company then offers both the acquired product and its own offerings to consumers. This allows the larger firm to diversify its revenue streams and compete with more established businesses in the market.