When most people think about financial services, they immediately picture banks, brokers and mortgage lenders. While these are all important components of the industry, there is much more to it than that. Financial services include a broad range of businesses that provide individuals, small business, large companies and even the government with the funds they need to grow their operations.
As such, this type of industry is vital to the economy because it allows consumers to invest their savings into something more productive, such as a new business or a home. This is what makes it possible for the tertiary sector to grow, which in turn creates more jobs.
One of the main functions of financial services is to act as middlemen between savers and borrowers. For example, banks collect deposits from those who have money and then lend it out to borrowers who need capital for various reasons.
Insurance is also a part of this industry, and it offers protection against risks that can affect the profitability of an investment or business venture. There are several different types of insurance, including life insurance, property insurance and liability insurance.
Other examples of financial services include debt resolution – which helps people get back on track with their credit card or loan repayments – and payment services – which process electronic fund transfers, issue credit and debit cards and manage systems that enable cashless transactions. The last category also includes market utilities, which help maintain and develop financial markets by operating stock exchanges, clearing houses and other facilities.
