Financial services are the economic services provided by the finance industry, which encompasses a broad range of service sector firms that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies and stock brokerages. The sector also includes investment banking, which provides advisory and capital-raising services to businesses and governments.
People use financial services to save money and invest it in a variety of ways. For example, when people put their money in a bank, the financial institution uses those funds to earn interest. Banks then lend out that money to individuals and businesses who need the extra cash.
The financial services industry is vital for a healthy economy because it promotes the flow of cash between different sectors of the economy. This allows the tertiary sector to grow, which is important for any developed country because it brings in more jobs and improves living standards.
Another way financial services help is by providing credit cards and hire purchase finance, which encourage people to save. This enables people to buy a car, house or other large items which they may not be able to afford upfront.
Regulatory bodies are also part of the financial services industry, which include independent agencies who oversee the operations of various banks and other financial institutions to ensure transparency and that clients are treated fairly. This industry is also made up of companies that offer a wide range of products, like mutual funds and mortgages.