The Importance of Financial Services in Today's Economy

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The Indian economy is made up of various essential segments called sectors. These sectors consist of businesses and enterprises providing services and goods to its consumers. The services by these business institutions are mainly brokerage firms, lending entities, and other financial services like safekeeping money. 

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The financial services industry is a broad spectrum comprising banking, credit cards, mortgages, payment services, taxation, investments, accounting, and planning. Financial services are also inclusive of professional and firm activities which are often referred to as financial instruments. 

In this article, let's learn in detail about the integral aspects of financial services and what are the essentials of a financial services course if you think about taking up one. 

What are financial services? 

Financial services are those services that are provided by business entities or professionals to cater to economic needs. Large conglomerates are dominant in this sector, contributing immensely to the country's economy. 

Financial services are considered to be temporary, rather than tangible assets. This is because financial services have limited their horizon to the activities of financial services entities and firms. In this scenario, financial products are goods, accounts, and investments that are bestowed upon an individual. 

Types of financial services

Different types of financial services are provided in the Indian economy. Since financial services are the backbone of the country, a variety of services are provided by financial entities of the country. They are: 

  • Banking 

The banking sector is an important component of the financial services of the country. The country comprises several public sectors, foreign sectors, private sectors, rural sectors, and urban cooperatives such as banks. The services offered by the banking sector are: 

  • Individual banking. 
  • Business banking. 
  • Loans. 
  • Treasury services. 

India's banking sector is regulated by the RBI or the Reserve Bank of India monitoring its liquidity, financial health, and capitalisation. 

  • Professional Advisory 

Professional advisories in India offer individuals and businesses a wide portfolio of different services like investment due diligence, real estate consulting, M&A advisory, risk and tax consultation, etc. These services are offered by several entities like domestic consultants to large organisations. 

  • Wealth Management 

Financial services offered in this segment include investing and managing the customer's wealth across various financial instruments. These financial instruments are notably: equity, debt, mutual funds, insurances, derivatives, structured products, commodities, and other important financial goals.

  • Mutual Funds 

 Mutual funds tend to offer different kinds of professional investment services consisting of different assets primarily debt and equity-linked assets. These buy-ins of mutual fund solutions are compared to stock markets and debt products. However, the mutual funds' segments have witnessed immense growth over the last five years and are considered to be the low-risk multiplier. 

  • Portfolio Management 

This segment includes a customised range of solutions enabling clients to reach their goals financially via the help of portfolio managers. This would help in analysing and optimising their investments across a wide range of assets like equity, debt, insurance, and real estate. 

The services of portfolio management are widely targeted at different HNIs with both discretionary and non-discretionary client interventions. 

Importance of financial services in today’s economy 

The presence of financial services in the country is what enables them to improve their economic conditions. The benefits of economic growth are therefore reflected upon the people as the sign of economic prosperity. Here are some important aspects of how the presence of financial services is pivotal in today's economy. 

  • Promotes Investments

The presence of financial services in the country not only creates a substantial demand for products and their producers, but it also meets the demands from one consumer to another for maximum investment. The financial services come up as a rescue for the investors like merchant bankers to enable an exponential capital raise. 

  • Promotes Savings 

Financial services like mutual funds and bonds provide an individual with opportunities for opening different kinds of savings. Therefore, differential investment options are now open for pensioners to gain reasonable returns without any risks. This scheme substantially increases the growth in income and other reinvestment opportunities that are initiated by the Government. 

  • Minimises Risks 

With the presence of the insurance companies, the risks of financial services are minimised. Therefore, various types of risks are not only covered to offer protection in business conditions, but financial services also make it easier to curb losses from natural calamities. Moreover, insurance is not the only source of finance but also a great source of savings as well. 

  • Maximises Returns 

The financial services cater to businessmen for giving maximum returns. This is only possible because of credit availability at a very reasonable rate. They also go on leasing assets of very high value as well. This enables the sellers and producers to increase turn over which proliferates in profit growth. Even during stiff competition, the producers can even sell their products at a lower margin and get high turnovers. 

  • Provides Greater Yields

Even though yields and returns might have a remote similarity, it however is way different from another. Yield attracts more producers to join the markets and increase their production to attract more customers. The presence of financial services, therefore, enables to produce not only exponential profits but is a great source of wealth maximisation. Furthermore, financial services also enhance goodwill and induce immense diversification which results in linear growth. 


Financial services enable the user to obtain assets on credit in accordance with a very convenient and reasonable interest rate. However, it is not easy to track the growth of financial services all the time. Therefore, it is required of some individuals who are good at understanding growth. 

If you are interested in taking up a financial services course and learning about its impacts of it on the Indian economy, check out Imarticus Learning's Advanced Management Programme in Financial Services and Capital Markets in collaboration with IIM Lucknow. This IIM Lucknow course on financial services enhances your knowledge of financial services and also helps to shape your professional life. 

For more details, check the website right away!

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