Financial services are one of the largest sectors in the economy and encompass a broad range of activities such as banking, investing, credit card services, mortgages, payment systems and insurance. While the term “financial services” often refers to professional firms and individuals, many community-based nonprofits also offer counseling and money management advice.
The different types of financial services are offered by banks, credit unions, investment brokers and mutual fund companies, insurance agencies, credit-card companies, notary service providers, debt resolution firms and global payment systems such as Visa and MasterCard. The term “financial services” can also include asset management companies, which manage pensions and insurance assets for clients.
Consumer finance includes loan services like credit cards and mortgages as well as payments systems such as direct deposit. Investment banks help businesses raise capital by offering merger and acquisition advice, underwriting and restructuring. Insurance agencies and reinsurance companies provide various kinds of insurance coverage, from life to property to automobile to medical.
Financial services boost the growth of all sectors in the economy by providing a flow of funds from the public and investors. A vibrant capital market is a sign of a healthy economy because it encourages people to invest, save and produce more goods. This in turn stimulates the demand for products, which leads to economic development and job creation. It also minimizes the risks of producers, who are protected by financial services from fluctuations in business conditions and natural calamities.