The financial services industry includes a broad spectrum of transactions in such areas as consumer finance, banking and insurance. The main focus of the industry is the provision of investment funding, including securities (see box).
A strong financial services sector can boost economic growth and prosperity. However, a weak financial services sector can be destabilizing and drag down the economy.
Various types of financial services are available for consumers to borrow funds and save money, ranging from savings accounts to credit cards. Without these, people would be unable to make purchases or pay for expenses, and an economy could suffer.
These services include a variety of different types of banks, loan associations and brokerage companies. Banks offer checking and savings accounts, mortgages and auto loans, while loan associations provide personal loans to consumers. Brokerage companies sell consumers mutual funds, stocks and bonds.
There are also several types of financial services that are not part of the banking industry, such as insurance underwriting and securities research. These types of services often entail the use of software and other technologies, and are sometimes part of larger conglomerates that serve a wide range of customers.
Besides helping consumers manage their finances, many of these types of companies are subject to regulations that prevent them from doing business in certain ways. This can hinder growth and innovation in the industry.
The role of the financial services industry is to help individuals and businesses achieve their goals and protect themselves against unexpected events. This is called financial wellbeing and has proven to be beneficial to everyone from those who are struggling financially to those who are saving for the future. The more that people understand how to manage their money and debt, the more they are able to take control of their lives and experience better health and happiness.
