When you think of financial services, you probably picture banks, brokers and mortgage lenders. But the industry actually covers a much larger range of activities, from direct savings and lending to investment, insurance and redistribution of risk. It serves individuals, small businesses, large companies and even governments.
Banking services are the foundation of the financial services industry. They include everything from deposit-taking to money market and mutual fund operations. Banks also provide credit-card, mortgage and other loans. They earn revenue from fees and commissions and the spread between interest rates charged to borrowers and paid to depositors.
The securities market is another large segment of the financial services industry. It includes the trading of bonds, stocks and commodities. It provides liquidity to investors and is an important source of funding for companies and governments.
Another important sector of the financial services industry is asset management. This includes services like hedge funds, mutual funds and pensions. This is a big part of the financial industry because it gives people an opportunity to invest their money and get good returns on it.
The last major piece of the financial services industry is insurance. This includes services that protect people against death and injury (like life insurance or disability coverage) and property loss and damage (like auto or home insurance).