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techsuch May 9, 2021 0 Comments

Overview, Trends & Analysis * Financial services describes the various offerings within the finance industry, including money management and digital banking technology. * And below we’ve outlined major terms, topics, and trends to provide a high-level financial services industry overview. * Insider Intelligence is launching its first products – Financial Services – to help subscribers stay ahead of the technologies transforming the full spectrum of finance, including fintech, banking, and payments. Click here to learn more. The financial services sector is accelerating its adoption of digitaltechnology. Paying with cash, participating in in-personal meetings withfinancial consultants, and even using an ATM are all fading facets offinancial services.76% of financial services companies plan to collaborate with other financialservices organizations. eMarketerTo help you navigate the evolving industry, we’ve outlined major terms,topics, and trends to provide a high-level financial sector overview.## What is the financial services industry?Financial services is a broad term used to describe the various offeringswithin the finance industry–encompassing everything from insurance and moneymanagement to payments and digital banking technology.There are a multitude of stakeholders and moving parts within financialservices, from credit card issuers and processors, to legacy banks andemerging challengers. And with financial activity becoming increasinglydigitized, especially as consumers are choosing to manage their finances fromhome amid the ongoing coronavirus pandemic, financial institutions andstartups are sharpening their technology and expanding remote services.## Financial services industry overviewThere are three general types of financial services: personal, consumer, andcorporate. These three categories encompass the major players and influencersfor companies and organizations trying to climb the ladder of the industry.### Personal Finance### Personal finance is an individual’s budgeting, saving, and spending ofmonetary resources. Business Insider IntelligenceWhy is personal finance management (PFM) important? Personal finance is anindividual’s budgeting, saving, and spending of monetary resources, likeincome, over time–while taking into consideration various monthly payments orfuture life events. It sets consumers up for all stages and major events inlife, from buying their first car to retirement planning.When choosing a bank or other financial institution, consumers typically lookfor businesses that offer personal finance services, such as financialadvisors. As money management activities increasingly migrate online,consumers are looking to banks that allow them to manage personal accountsremotely and take control of their own financial health via online platformsand mobile apps.Financial institutions that offer personal finance management (PFM) tools areparticularly attractive to younger, tech-savvy consumers. Some of the topplayers in the personal finance market include:Chime earns interchange fees from debit card transactions. Chime * Chime: This US neobank provides fee-free financial services through its mobile app. It recently launched a new Visa credit card, designed to help customers build a credit history. And during the coronavirus pandemic, Chime built customer loyalty by rolling out $200 stimulus check advances to 100,000 customers. * N26: This German-headquartered neobank has no branch network, meaning it reaches consumers completely virtually. N26 products include a free checking account, personal loans, and a suite of PFM tools. * Personal Capital: This US-headquartered direct-to-consumer (D2C) digital wealth manager offers savings and retirement planning services. * Varo: In 2020 Varo became the first neobank to receive FDIC approval and to receive a national bank charter. According to Insider Intelligence, Varo plans to use the approval to add credit products such as short-term loans, credit cards, and home financing. * Cleo: You may recognize this service from Facebook Messenger. This AI-powered money management chatbot is now offered as an app that pulls in customers’ bank data to analyze spending in real time and generate personalized financial insights.### Consumer FinanceFrom investing in real estate to paying for college, consumer finance helpspeople afford products and services by paying in installments over a fixedperiod of time. The consumer financial services market is made up of keyplayers including credit card services, mortgage lenders, and personal andstudent loan services.Some popular consumer finance services include:Amex is a popular payment firm, known for its charge and credit card services.Crystal Cox/Business Insider * American Express: Amex is a popular payment firm, known for its charge and credit card services accompanied by various rewards programs. Recently, Amex partnered with Marriott Bonvoy to offer rewards for spending at gas stations and restaurants to a travel-focused credit card, in an effort to adjust perks based on the effects of the pandemic. * Ally Financial: This digital-only bank went public in 2014 and is currently used by over 8.5 million people. It provides financial services ranging from vehicle financing and insurance to mortgages and personal loans. * LendingTree: This is the largest online lending marketplace in the US. LendingTree connects borrowers with various lenders to help them find the best deals on loans–including car, home, and personal–credit cards, deposit accounts, and insurance.### Corporate FinanceCorporate financing is an all-encompassing term to describe the financialactivities of a business, such as sources of funding, capital structure,actions to increase the company value, and tools to allocate resources.Jobs in the corporate finance sector include accountants, analysts,treasurers, and investor relation experts that all work to maximize the valueof a company.Three key sources of funding in corporate finance include:Sequoia Capital is a venture capital firm specializing in seed, startup, earlyand growth stage companies. Katie Canales/Business Insider * Private equity: This is the value of company shares not publicly listed. High net worth investors buy shares of private companies or established mature companies that are failing. They are essentially in complete control of the companies they invest in. * Venture capital: Venture capital (VC) is financing provided to startups that firms believe are poised for long-term growth. Due to the risk associated with investing in young businesses, venture capitalists typically invest in less than 50% of the equity of the companies. * Angel investors: These are independently wealthy individuals looking for small businesses and startups to invest in. Angel investors are essentially purchasing a portion of the company, which forces founders to relinquish some control. ## Financial Services Industry RegulationsRegulatory bodies are interconnected with various industries, and financialservices is no exception. Independent agencies are designated to overseedifferent financial institutions’ operations, uphold transparency, and ensuretheir clients are treated fairly.Two key regulatory agencies within financial services include: The FinancialIndustry Regulatory Authority (FINRA) and the Office of the Comptroller of theCurrency (OCC). * FINRA: This is the largest independent US regulator that oversees brokerage firms and exchange markets. In 2019 the FINRA launched the Office of Financial Innovation to aid communication between regulators, investors, and financial service providers. Essentially, it was set up to assist in understanding and regulating the technological advancements in the finance industry. * OCC: This is an independent bureau within the US Department of the Treasury designed to regulate all national banks. Most recently, the OCC announced that banks cannot use the coronavirus pandemic as a means for accelerating branch closures. According to Insider Intelligence, the OCC is standing by existing rules that govern bank closures. ## Financial Services Industry Trends & StatisticsFrom personal finance to commercial banks, digital advancement and increasedfinancial technology is rapidly transforming the financial sector. And twotrends in particular that are driving this digital evolution are: tapping intoa huge gig worker opportunity and the growing influence of big tech companies.### Gig Economy WorkersAccording to Insider Intelligence, gig workers have been massively underservedby financial services because they represent a high-risk demographic.But thanks to technological advancement in the financial sector, institutionscan conduct more thorough risk assessments, which could make serving gigworkers worthwhile. Half of the US population is expected to do gig work by2028, and financial institutions that cater to this demographic could capturea major monetization opportunity.Digital gig work generated $204 billion in customer volume in 2018 and isexpected to grow to $455 billion by 2023, according to a recent Mastercardstudy.The Apple Card could open doors to additional financial tools such as debitcards or PFM applications. Mary Meisenzahl/Business insider### Big Tech CompaniesBig tech companies, like Apple and Amazon, could grab up to 40% of the $1.35trillion in US financial services revenue from incumbent banks, according toan Insider Intelligence report.Apple’s launch of the Apple Card could open doors to additional financialtools such as debit cards or PFM applications. And Amazon could bring AmazonPay in-store–which could attract merchants by saving them interchange costs,cutting into a $90 billion annual source of revenue for issuers and networks.And with 54% of respondents to a Bain study indicating that they trust atleast one tech company more than their own bank, consumer trust is making bigtech players a huge threat in the finance industry.## Financial Services Industry AnalysisThe influence of tech-savvy consumers, looming threat of big tech companies,and shifting attitudes of regulators toward new tech, are all impacting thefinancial services industry.Financial growth can be achieved with a touch of a button. And whether you’rean individual exploring wealth management options, or a CEO trying to increasethe value of your company to shareholders, advanced tech will guide you tosuccess within the finance sector.## Interested in more financial services content?Insider Intelligence is launching our first product — Financial Services,which will include a wealth of research reports, charts, forecasts, andanalysis that combines eMarketer’s industry renowned methodology with BusinessInsider Intelligence’s agility and expertise in financial services.

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