The financial services industry encompasses a wide variety of institutions and businesses. It includes everything from banks to credit unions, credit-card companies to insurance agencies. The sector includes for-profit ventures as well as nonprofit organizations that provide counseling and money management advice. It also includes companies that help people manage their debt and invest their savings.
The banking segment of the financial services industry handles direct saving and lending. It earns revenue from fees and other methods, like the spread between rates on loans and deposits.
Other companies in the financial services industry handle investment management, insurance and intermediation. These firms may help individuals and corporations invest their money by providing them with access to securities (stocks and bonds), mutual funds and other types of investments. They may also act as intermediaries, helping to channel cash from savers to borrowers and redistribute risk.
Insurance companies provide a vital service by offering protection against loss and uncertainty. Whether it’s life, health or property insurance, these services can cushion the blow of unexpected events.
Almost everyone interacts with financial services at some point, from using a bank’s ATM to paying for a coffee with a credit card. Many people rely on these services to stay out of debt and make smart money choices. Those who work in the sector contribute to a stronger economy and a more resilient society.