What exactly is the Financial Services Industry?

 Agriculture, health care, communications, real estate, and other sectors make up the economy, but the Financial Services sector is the most important of them all.

Financial Services is the most prominent sector among all sectors because it is so vital to economic progress. With the global financial crisis (2007-2009) and the subsequent Covid-19 pandemic, which resulted in global lockdown, the importance of a well-functioning financial services sector in the economy has skyrocketed. The financial services sector's strength is proportional to the country's population's prosperity.

What exactly is the Financial Services industry?

The Financial Sector, according to the International Monetary Fund (IMF), provides financial services to individuals and businesses. It offers a diverse range of services, including banking, investing, insurance, tax, and accounting, and it is the world's largest earner and equity market capitalization company. Bills, checks, promissory notes, debt instruments, letters of credit, bonds, certificate of deposits, and other financial instruments are examples.

Maintaining the financial services sector's credibility and trust requires managing risks and providing opportunities for the ordinary man. In an environment where interest rates are falling, the financial services sector generates a significant share of its lending and mortgage income. When loan rates are low, the economy allows for greater expenditure and capital projects to be undertaken. In such a circumstance, the financial sector benefits, which leads to increased economic growth. India's financial sector has changed dramatically after Covid-19, with quick expansion, robust growth of current financial services, and new organisations entering the market.

The Financial Services Sector's Role

The Financial Services industry is regarded as the economy's key driver because it allows free flow of capital and liquidity, as well as risk protection and providing opportunities for investors, savers, and borrowers. It directly contributes to the growth of the economy because the standard of living rises at the same time.

The financial services sector's two main functions are to stimulate investment through the stock market, mutual funds, and banking accounts, as well as other functions such as:

• Individuals, governmental and private organisations receive financial help.
• Promoting the issue of debentures, stocks, and short-term loans, among other things.
• Playing an important role in the country's entrepreneurship growth.
• Other responsibilities include:
• Value Exchange is a method of exchanging money.
• Intermediation is a method of transferring funds from savers to borrowers.
• Risk Transfer is a method of valuing and assigning certain risks.
• Liquidity is the ability to transform assets into cash without incurring significant losses in value.

Individuals, governmental and private organisations receive financial help. Promoting the issue of debentures, stocks, and short-term loans, among other things. Having a significant impact on the development of

Also Read:- Benefits of investing in Indian stock market

Financial Services Sector's Importance

The value of a well-functioning financial services sector is reflected in the economy and the level of living of its citizens. Individuals with money would not be able to locate the correct source of channel for investing without the Financial Services sector, and borrowers would not be able to benefit from rising funds or other assets without it.

• Customer-centricity is a feature of the financial services industry. The primary goal of the Financial Services industry is to meet consumers' financial demands. Various variables such as cost, maturity limit, loans, and so on are determined based on the customer's appropriateness and market demand.
• Intangibility: The Financial Services Industry is by its very nature intangible. The brand image of a company is extremely important to its growth.
• The Financial Services sector is perishable in nature because the services cannot be stockpiled in advance. Financial services are created and delivered in accordance with the needs of the consumers.
• Financial Services is an information-based industry because it teaches customers about their financial requirements and needs for a better outcome.
• The Financial Services Sector is dynamic in nature, changing as revisions and rules are passed. As a result, it has a dynamic nature.