Financial services are the business of providing money management tools, credit facilities and investment products. They are a vital part of the economy, helping people with little money manage their savings and invest in businesses or assets. They also help people with more money invest, and they make it possible for businesses to grow and expand by lending them capital.
Companies that provide financial services include banks, insurance firms, consumer finance companies, investment funds, mortgage lenders and real estate investment trusts. The sector also includes private equity and venture capital funds, which supply investment capital to companies in exchange for ownership stakes and profits.
Most of the world’s poor lack access to even basic financial services, such as a checking account, a way to save, credit cards or a safe place to keep their money. Without them, they cannot build small businesses that can improve family incomes, raise children’s living standards or provide health and property insurance.
The financial industry is undergoing significant consolidation and regulation to reduce risk and create more opportunities for consumers. For example, mergers have made many large banks smaller, and more money managers are joining the ranks of major brokerage houses. But for the most part, the industry is doing well and is expected to continue growing in the future.