Financial services are a broad category of businesses that provide a range of money-related services. It includes everything from insurance and money management to payment processing and digital banking technology.
Banks and other financial institutions are the main players in this sector, although it includes a variety of entities that earn revenue primarily through fees, commissions, and other methods. These include large commercial banks, community banks, credit unions, investment banks, and insurance companies.
Other organizations that also deal with money are trust funds, stockbrokers, and brokers of commodities like coffee or oil. These businesses may buy at a low price and sell at a higher one, aiming to make a profit on the difference between the two.
The primary function of the banking industry is to lend and save money on behalf of customers. It does this through the issue of loans and deposits, with interest charged on each type of account.
A bank can be a business that earns revenue by earning interest on deposits or by charging borrowers for loans, or it can be a nonprofit organization with an interest in giving back to the community. It can also be a conglomerate that has subsidiaries or other departments in different areas of financial services, such as life insurance or asset management.
The financial service sector plays a vital role in the economy of a country, and is often the first place consumers turn to when they need to borrow money for large purchases. It also bolsters consumers’ confidence and purchasing power, which in turn boosts economic growth.