Financial services is a diversified sector that encompasses various institutions which provide investment, saving, credit facilities and also other allied services like factoring, bill discounting and credit card services. This industry contributes to the economic development of a country by mobilizing savings and investing them in productive enterprises to generate more income which further leads to increase in production and consumption.
In this industry, we find banks that offer depository services such as deposit accounts (checking and savings), lending services such as credit cards and mortgages, and other types of specialized finance like agri-banks. These financial services help in the economic growth of a country by increasing the rate of savings and investments which ultimately results in higher gross domestic product (GDP).
Other institutions that provide financial services include investment firms that invest funds in securities such as stocks, bonds and mutual funds; private equity funds and venture capital providers that supply money to new businesses for a stake in their profits; and debt resolution service companies that handle defaulted loans. This industry also includes payment and settlement service providers that process electronic fund transfers, issue credit and debit cards, and manage credit card networks.
Insurance companies are an important part of the financial services industry, providing protection against unforeseen events. They offer policies to cover costs such as medical expenses, loss of income due to death or disability, and property loss or damage. They also provide assurance services such as actuarial consulting and advisory services to help companies evaluate their risk and determine the appropriate level of coverage.