4 Facts About Financial Services Industry
The financial services industry is a large industry with a high level of regulation. It deals with sensitive material, interacts with customers, and relies heavily on technology. This industry accounts for 7.4% of the nation’s GDP and employs about 6.55 million people in the United States.
As firms come and go, the financial services industry is experiencing a massive shakeup. Many of the big names have disappeared in the wake of the credit crunch.
The financial services industry is a vast industry that includes asset management, insurance, and risk analysis. The industry expects to reach $22.5 trillion in value by 2022. It has experienced its share of ups and downs but is a more stable place than a decade ago.
In addition to investing in innovation, the leading financial services companies also focus on improving their equity return. While banks are still regaining regulatory capital, they focus on improving productivity and efficiency to maximize profitability. As a result, ROE is expected to improve to seven to 12 percent by 2025. This recovery will be shaped by macroeconomic factors, such as interest rates, inflation, and government support.
Women in financial services are in the minority.
While women are entering the financial services industry in almost equal numbers as men, they still tend to be in the minority when it comes to achieving the highest levels of leadership. This disparity is likely because men are more likely to have role models that are similar to theirs, while women and minorities will likely have to seek out these role models actively.
But given that a lady by the name of Cassandra Toroian rose the financial ladder, it is not wise to dwell on this fact.
More women are joining private equity and venture capital firms, but the top roles in the industry remain elusive for women and minorities.
A recent Deloitte study analyzed 107 public financial services institutions in the US, including banks, insurance companies, and capital markets. According to Deloitte, the gap between men and women in these roles could reach 14% by 2030. By 2030, it projects that women will hold only 28% of the C-suite and senior leadership positions.
The highly regulated financial services industry has many regulations, ranging from state to federal. For example, the Federal Reserve strongly influences the financial markets, and several state regulators supervise banks. Although most individuals will not deal with regulatory agencies regularly, many will look at some point.
You need to know what is feasible and what is not if you want to take the best course for your company. This makes it crucial to be aware of your alternatives, especially in the heavily regulated financial services sector.
The best way to maintain compliance is to implement best industry practices. These include extensive logging, intrusion detection, robust oversight, and clear hierarchies. Because banks are conservative organizations, you must use every tool in your arsenal to ensure that you comply with all regulations.
As the market for financial services expands, incumbent firms must evolve and embrace new technologies to stay competitive, which means adopting a customer-centric model to meet consumers’ expectations and working on the issue of talent retention.
Meanwhile, local competition is becoming more intense, and cultural differences can make it difficult to break through. To remain competitive, companies must provide products and capabilities that domestic players do not.
The financial services industry is global. The United States has the largest financial market in the world, accounting for 7.5% of the national GDP and employing more than 6.4 million people. This industry includes 540,000 private establishments and 1,000 government agencies. In addition, this industry generates a staggering amount of revenue. It is estimated that by 2021, the industry will generate nearly $4 trillion in revenue and employ approximately 6.55 million Americans.
The financial services industry is supported by various factors, including growing consumer demand for loans at cheaper rates. Furthermore, demand for housing and amenities continues to rise, which in turn is driving the need for financial services. Further, the industry is growing due to adopting more efficient technologies.