The financial services industry is responsible for helping individuals and companies get the money they need when they need it most. The sector provides millions of people with a steady stream of loans to help pay for mortgages and cars, allows them to save for retirement and other goals, and safeguards their health, homes and property through insurance coverage. It also provides the means for businesses to grow and expand by allowing them to obtain loans and credit to fund projects.
Because the world is becoming increasingly digitalized and customers are constantly changing their wants, needs and expectations, financial services firms need to re-think how they operate. For example, the way they serve their customers must evolve to accommodate for the fact that many of them don’t make big financial decisions when their banks want them to – rather at pivotal life moments such as getting married or buying a house. These shifts mean that banks need to understand their customers better and use the data available to them to anticipate these moments.
As such, the sector has become more customer-centric, with firms focusing on providing products and services that cater to specific needs, at each stage of a client’s life cycle. To do this, they need to have an in-depth understanding of their clients’ behavior, for instance, by looking at how they interact with other products or when they typically make purchases. Having this data will allow them to be ready with the right product or service to provide at that moment.
The broad financial services industry comprises many different sectors, including deposit-taking and lending of all types; investment banking (including brokerage, mergers and acquisitions and underwriting); asset management (including mutual funds, hedge funds and pension fund management); custodial and depository services; payment systems and services; securities trading; and other auxiliary financial services (including information and intermediation). The recent global financial crisis has given the sector an unwanted spotlight, however, it’s a very important part of the economy, and the healthy it is, the more prosperous the economy will be.
In order to stay relevant in the future, financial services need to continue to innovate, which will require them to be more data driven and use their massive amounts of data to identify market trends. Moreover, the lines between the different financial services are blurring, with many of these firms now offering a range of products that were once exclusive to specific sectors. This is partly because of technological changes, but it’s also because consumers are demanding more from their financial services providers. For example, they want to be able to check their bank account online at any time and use a variety of payment methods. They also want to be able to access advice and guidance on how best to manage their finances. This is why the emergence of FinTech is such a significant development in this space.