Financial services are a key component of any economy. Without them, people wouldn’t be able to save and borrow as needed. And without them, companies wouldn’t have access to the funds they need to grow and expand.
The primary function of financial institutions is to take deposits from individuals, pool them, and then lend them to others who need them. This money is then used to finance businesses, purchase goods, and pay for other services.
Other services provided by banks include checking and savings accounts, as well as loan associations that provide mortgages and personal loans. Banks earn revenue by the difference between the interest rates they charge depositors and those they charge borrowers.
Insurance is another important subsector of the financial services industry. This includes life insurance, disability income insurance, health insurance, and home insurance.
Investment capital is also a major component of the sector. Private equity funds, venture capital providers, and angel investors supply funding to businesses in exchange for ownership stakes or profit participation.
Brokerage is a form of financial intermediary that assists the buying and selling of securities such as stocks, bonds, mutual funds, and shares. Some brokers may also provide financial consulting services and act as a middleman to help clients make informed decisions about the markets in which they trade.
Financial advisors often help individuals with a variety of tasks, including due diligence on investments, valuation services for businesses, and helping people in real estate endeavors. They are also sometimes referred to as financial planners or wealth managers.