Financial services are a large and varied field that encompasses everything from banks to credit card companies. These services include providing a place for people to hold their money and provide loans (like mortgages and car loans), giving investment opportunities in things like stocks, mutual funds and real estate, facilitating mergers and acquisitions, and even lending capital through things such as venture capital and initial public offerings of stock (IPO). The sector also includes debt resolution companies, global payment networks such as Visa and Mastercard, and other critical financial utilities that support the industry’s function.
Despite its massive size, the financial services industry has been fragmented over time. Historically, each sector stuck to its own specialty. Banks offered checking and savings accounts, loan associations provided mortgages and auto loans, brokerage firms gave consumers the opportunity to invest in stocks and bonds, and credit card companies solely offered credit cards.
Now, however, digital financial services have started to eat into the market share of some traditional players. For instance, in-store mobile payment apps such as Apple Pay and Amazon Pay save merchants from paying interchange fees, which reduces a big source of revenue for issuers and networks.
The future outlook is mixed for this highly-fragmented industry. There are some signs of growth, such as the increased availability of low-cost credit to millennials. Additionally, there is a push for financial inclusion around the world that has helped millions of people gain access to banking services for the first time. However, the sector is still subject to heavy regulations that can stifle innovation and growth.