The financial industry is undergoing a clean up, a process that is benefiting consumers and stockholders. Since 1995, more than two hundred large and small organizations have merged to form larger ones, creating economies of scale. This consolidation has resulted in layoffs and more job openings, but it is also creating new opportunities. The repeal of the Glass-Steagall Act, which separated large and small banks, has created new opportunities for small and large banks alike. While more mergers and buyouts have accompanied the financial industry’s cleaning up process, they are also creating jobs for those who are qualified.
Economic importance
The economic importance of financial services cannot be denied. They facilitate the growth and development of an economy by increasing domestic and international trade. These services also help the government to raise funds, promote investments and savers, and diversify regional development. All these factors help to ensure the dynamism of an economy. The following are some of the main benefits of financial services. The following are some of the reasons why financial services are important. In a nutshell, financial services help to create wealth and prosperity.
The financial services industry is highly globalized. Financial firms in the U.S. export their services throughout the world. These exports support more than a million U.S. jobs. In addition, the financial services sector operates in foreign markets directly through foreign direct investment. In fact, foreign institutions provide employment to almost 400,000 Americans. The importance of financial services can be seen in the following charts. This graphic explains the economic importance of financial services for a nation.
Diversity
The financial industry has long been challenged to increase its gender diversity, but the Dodd-Frank Wall Street Reform and Consumer Protection Act has given banks a boost by establishing Offices of Minority and Women Inclusion and Joint Standards. These organizations help banks meet diversity goals by providing resources and fostering dialogue. But in recent years, progress has been slower. Despite the lack of diversity in the C-suite and senior leadership, the industry has made strides to increase diversity in the workplace.
Financial services should look beyond single candidates to create teams of diverse employees. Research shows that diverse organizations outperform their non-diverse peers. Thoughtful management action can help push the financial services industry forward while bringing about DEI for women. 100 Women in Finance applauds this initiative by citing research findings that show that by 2021, women will make up 24% of the senior management ranks. But achieving gender diversity is just one component of the larger DE&I mandate. Leaders must cultivate an inclusive culture to achieve the desired results.
Regulations
As the financial services industry continues to grow and innovate, governments around the world are trying to balance competing priorities while ensuring the safety and protection of consumers. This requires structural changes and the reform of established regulatory processes to ensure that new financial technologies and services are properly regulated and facilitated. In order to do this, policymakers are exploring targeted and flexible regulatory models. Here are some key points to consider when implementing new regulations in your country.
First, financial services regulation is about the fairness of the financial markets. Regulation aims to prevent fraud and keep markets transparent and efficient. These regulations also ensure that customers are treated fairly. Various federal and state regulators oversee financial companies. Each agency has a specific purpose. For example, the Federal Reserve Board oversees the commercial banking industry, FINRA supervises brokers, and the Securities and Exchange Commission (SEC) oversees the stock market.
Employment opportunities
Careers in the financial services sector offer plenty of potential for those who enjoy the numbers and methodical nature of the industry. There are a variety of fields to choose from in this field, including insurance, securities brokerage, and debt and credit management. You can tailor your career path to fit your interests and skills. There are even insurance careers suited for people who enjoy working with people and are good with numbers. If you’re interested in learning more about financial services careers, keep reading to learn more about these fields.
Impact of COVID-19 pandemic on financial services
After the COVID-19 pandemic struck, the European Union banks’ profitability tanked – down to 0.5% in the 12 months to June 2020 from 7.0% – largely because of a steep rise in impairment costs. While revenues are unlikely to improve significantly in the near future, this scenario creates a fertile ground for criminals and fraudsters. In addition to exposing hidden wrongdoing, the pandemic raises a host of other potential liabilities, including employment practices and whistleblower retaliation claims.
Financial services are already experiencing a surge of change as they navigate accelerated digital transformation. They have to navigate the growing financial implications of economic fallout, and mitigate the impact on their workforce and customers. Here are some of the ways financial institutions can cope with this new challenge. Weigh your options: