Financial services are economic services tied to finance. More specifically, they encompass a wide range of activities that help individuals and businesses manage money matters. They include banking; credit unions and other depository organizations; building societies and mortgage banks; insurance companies; credit-card issuers, brokerage firms, and asset management companies. These entities may earn income from fees, commissions, the spread between the interest rates they charge on credit and the rates they pay on deposits, and other methods.
Most people use financial services at some point in their lives. Whether it is saving for a rainy day, taking out a loan to buy a car or a home, or investing in securities such as stocks and mutual funds. Without the proper support from the financial services industry, many of us would struggle to achieve our personal and business goals.
This sector is essential to the economy, and it contributes significantly to a nation’s gross domestic product (GDP). However, it is not without its challenges. The growing size and reach of the industry has led to increased concentration in ownership and operations. At the same time, technology has introduced new ways for consumers to access financial services and products.
Conglomerates like banks that offer a full spectrum of financial services are becoming more common. For example, a company that offers investment and commercial banking may also offer life and health insurance. This allows them to retain customers and simplify administrative processes. It also reduces the risk of a downturn in one segment negatively impacting the others.