Financial services are the industry sector that includes banks, credit unions, insurance companies, and credit-card companies. These services include direct savings and lending as well as investing, asset management, insurance, and the redistribution of risk. This industry is incredibly varied and complex.
Banking services include everything from storing your paycheck to helping you qualify for a mortgage. These firms take your money and help you save it, invest it, and pay for things like electricity or a meal with a friend. They earn revenue from fees, interest rates, and other methods like the spread between rates on loans and deposits.
Other financial services are investment banks that work with the private and public sectors to raise capital. These firms may also engage in mergers and acquisitions to grow their client base. They may also offer advisory and wealth management services to high net-worth individuals. Some of these firms also provide financial research, broker services, and prime brokerage to their clients.
Insurance services are a bit of a hybrid as they’re both a financial good and a service. As a financial good, an insurance policy protects you against unforeseen events such as illness or death. As a financial service, the brokers who search for or negotiate rates and the underwriters who create policies are all working to provide this protection.
Regulatory bodies are independent agencies that oversee different industries to maintain transparency and ensure fair treatment of consumers. These are key players in the world of financial services and often have a direct impact on the overall health of the economy.