Financial services are economic services provided by the finance industry, which encompasses a broad range of service sector firms that provide management and oversight for financial assets. This includes credit unions, banks, insurance companies, and investment advisory firms. The financial services industry is highly regulated and has become increasingly global. Its services include savings and investments, banking, credit cards, factoring, hire purchase finance, mutual funds, and capital market instruments.
In the past, banks have been the main provider of financial services. However, in the 1970s consumers began to shift their business away from banks and towards other financial service sectors like brokers and mutual funds companies. These sectors also offered products that were not available from the banks, such as money markets and mortgages. This led to a blurring of the lines between different financial service industries as they started offering more of each others products.
Some of these sectors specialise in specific financial goods or services, such as investment banking which assists individuals, corporations and governments raise capital through the issuance of debt and equity securities, underwriting mergers and acquisitions, and acting as an adviser to businesses on corporate restructuring and new issues of shares for public trading. Other sectors, such as investment management, offer more long-term advice to private clients on the investment of their money, often through structured products which are complex and may involve a wide range of investments and assets including real estate, shares, bonds, derivatives, and currencies.
Another area of financial services is credit counseling which provides assistance to people facing problems with repayment of loans or mortgages. This can include help with budgeting and debt management, as well as providing information on how to avoid foreclosure and bankruptcy. Some of these services are offered by non-profit organizations, while others are provided by government agencies.
Insurance is a major part of financial services and provides a safety net for people in case of accidents or illness. It can be bought through agents or directly from insurance companies, which often provide online quotes for customers. There are a number of different types of insurance policies available, from life to medical and travel.
Other types of financial services include commercial banking, which handles large volumes of daily transactions for businesses and individuals, such as deposit and withdrawal transactions, payment of bills, and lending. Some commercial banks offer investment services such as brokerage and mutual funds, while others are involved in risk management and provide insurance services. These types of companies are usually part of a larger financial conglomerate, and are encouraged to diversify their products and services in order to attract more business. Some of these conglomerates have even taken the step of buying up smaller financial service firms in order to expand their reach and market share. This has proved to be a successful strategy for many firms, with the bigger company benefiting from the economies of scale and the ability to cross-sell their various financial services.