Financial services are the economic services provided by the finance industry, which encompasses a broad range of firms that manage money, including credit unions, banks, credit-card companies, insurance firms, investment houses and stock brokerages. The industry is a major contributor to economic growth as it enables businesses and individuals to make investments, borrow money and manage financial risks.
Banks are at the foundation of the financial services sector. They take in deposits and lend them out, making a profit by the difference between what they pay depositors and what they charge borrowers. They also offer other services like providing a certified check (or cashier’s cheque) that is guaranteed by the bank, managing payment systems to facilitate transactions and settlements, and offering advisory services to help customers make sound financial decisions.
Other providers of financial services include securities firms, which trade shares and other assets on behalf of clients, and asset management companies, which oversee the investment of funds by taking care of things like purchasing, selling and trading stocks and bonds. These companies also provide advisory services to assist clients with their investment choices.
Insurance is also a huge part of the financial services sector, and it covers everything from life insurance to health insurance, car insurance to property insurance. This industry also includes pensions and savings schemes, as well as investment companies which aim to make profits by buying low and selling high. They also invest in other companies by underwriting debt and equity for them.