When you think of Financial services, you probably imagine banks, brokers and mortgage lenders. But in reality, this industry is much more encompassing than that. It also involves investment and wealth management firms, insurance companies and more. And it’s not just for individuals: small businesses, large corporations and nonprofits all need the financial tools to thrive as well.
Financial services are the economic services provided by the finance industry, which encompasses a broad range of service sector firms that provide financial management, including credit unions, investment banks, commercial banks and building societies. These firms essentially provide intermediation services by taking deposits, lending money and supplying all kinds of insurance cover as well as leasing and hire purchase facilities. The financial services industry is a vital component of a country’s economy. When the sector and a country’s economy are strong, it can boost confidence and purchasing power, but when it is weak, it can lead to recession.
While the number of companies providing a specific type of financial service can vary by country, most countries have some form of central bank; depository institutions such as commercial banks and savings and loans associations; credit unions and credit cooperatives; and private equity funds. Many countries have also established a market for securities, which allows individuals and companies to buy and sell stocks, bonds and other assets.
Other examples of financial services include investment banking, where brokers and other professionals work to help individuals and companies invest their money. This includes helping them manage their portfolios, as well as advising them on risk and return. Then there are the ‘family office’ firms, which offer a range of advisory and investment services to a select group of wealthy families and individuals.