The financial services industry encompasses a wide range of businesses that provide products and services that support the finance sector. These include credit card networks and services that enable the exchange of currencies, debt resolution services, global payment systems, and financial market utilities (like stock, derivatives and commodity exchanges). It also includes investment banks, brokerage firms, commercial banking, private bank services for high-net-worth individuals and their families, and insurance companies.
The main function of financial services is to promote savings and investment by providing easy access to funds. They help producers to increase production in order to meet the demands of the consumers, thus leading to economic growth. This reflects on the common man in the form of economic prosperity as the demand for goods and services rise. It also encourages the producers to go for diversification of their activities in order to maximize their wealth.
The industry also provides services for mergers and acquisitions, structured finance, and investment management. These services are provided by the following types of financial institutions: central banks; depository organizations such as commercial or savings bank, mortgage bank and building societies; credit unions; monetary authorities, credit-card companies and hire purchase finance companies; credit-card acquiring and issuing banks; and financial intermediation firms (like commercial and investment banks). It is also important to note that the financial industry is a critical part of any economy. When it fails, it can lead to a recession. In order to avoid such a scenario, it is necessary for the government to regulate and monitor the financial services industry.