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Finance is basically a field of expertise that encompasses a lot of different things. This is the general area in which one focuses on managing money and financial resources, planning for one’s retirement, investing for wealth building, etc. Basically, finance is a methodology of looking at and analyzing a variety of different financial issues and then making plans as to how these issues can be addressed in a realistic and efficient manner. Finance is, simply put, the art of understanding of financial concepts, as well as applying those concepts to different scenarios and goals. There are a wide variety of different fields in which finance is typically required, including:

Real estate: Real estate firms typically deal in the purchase and development of real estate properties. These firms may find themselves involved in the buying or selling of commercial and residential real estate, as well as the construction of new establishments (such as apartment buildings and corporate developments). In the development of these real estate properties, finance is utilized, as is necessary in order to ensure that the property will meet all of its obligations, as well as will generate an income which can be used to pay off the outstanding balance of any loans that have been associated with the property.

Private Equity: This is an umbrella term that includes a number of different sub-categories under which we can break down various sectors, including: venture capital firms, early-stage venture capitalists, life science investment banks, small/medium sized companies, venture capitalists, secondary market purchase and repo institutions, and more. The most common sectors are listed below, in order from the most highly visible to the least visible. It should be noted that these rankings are not necessarily in order of visibility, but rather of the specific functionality of the sector relative to the overall makeup of finance firms. For example, while life science investment banks are heavily regulated, venture capital firms tend to have less restrictions and are therefore less visible to the public eye.

Commercial Banking: Financial firms often deal with large cash flows and therefore may find themselves involved in complex transactions (such as commercial mortgage borrowing) on a daily basis. In order to facilitate this process, commercial banking relationships are formed between lenders and borrowers. Some examples of such relationships are: bankers providing commercial mortgage lending services to companies, providing payroll services, providing commercial funding, providing credit risk management, etc. While banks may find themselves involved in just the tip of the iceberg in some regards, others may find themselves tangential to larger efforts by larger financial firms. Examples include the wholesale credit markets and commercial real estate financing relationships.

Global Finance: Just as commercial banking relationships may exist among multiple sectors, global finance firms do, too. A company in one country may find itself leveraged in the financial markets of many other countries. Examples include: a U.S. company establishing a manufacturing facility in China in order to increase revenues there, or a European company seeking out potential partners in emerging markets like India. As a result, global finance relationships are most often forged between international banks, as well as smaller local ones. In fact, when it comes to commercial finance relationships, there are typically very few if any local relationships. These relationships tend to be more important when a company is planning on international expansion, as it may require access to international capital in order to expand its footprint.

Asset Management Firm: Similar to the above example, an asset management firm may find itself tied into several different financial markets. However, instead of operating within one specific country, these firms may be found operating in several different countries at the same time. For example, an asset management firm may have ties to various European countries where laws and policies may vary (e.g., taxation, corporate laws, etc. ), as well as those of Asia-Pacific countries (e.g., financial reporting standards, etc. ). Additionally, some asset management firms may specialize in particular types of industries, such as the insurance industry.

Other types of specialized financial services firms exist, too. For example, a manufacturer looking to contract with a manufacturer in another country may work with a supply chain finance firm instead of an asset management firm. Likewise, a financial services firm that works to provide outsourced jobs may work with a supply chain finance firm instead of an asset management firm. Even when a firm specializes in only one particular area of finance, however, there are typically tie-ins with other companies that can help finance the firm’s activities.

The evolution of the finance industry has created a variety of new forms and shapes for financial firms. These forms and shapes have helped to mold the way that these companies operate, as well as the kinds of relationships that they develop with one another. In addition, the financial sector has made the evolution of finance even more interesting. While a few decades ago, the relationships between the various firms in the finance industry were more or less set in stone, recent changes in the economy and the concentration of manufacturing power have made it possible for financial firms to evolve much more quickly than was once the case. Today, as the global economy continues on its recovery path, the evolution of the finance industry looks set to continue and grow into the future.