Financial services are businesses that facilitate banking, investing, credit card transactions and loans. These companies are essential to a nation’s economy because they allow for the free flow of capital and liquidity in the marketplace. They also help boost consumer confidence and purchasing power, and are critical in helping individuals manage risk. When the sector and economy are strong, people earn more money, which means they can afford to invest in new products or borrow for larger purchases.
The companies that make up this industry include banks (including deposit-taking institutions and building societies), credit unions, credit-card issuers and networks, asset management firms and insurers. Other providers include payment systems (such as Visa and Mastercard), debt resolution services, currency exchange companies and wire transfer services, and credit-card machine networks. This sector also includes companies that provide data on market trends and investor performance, accounting and tax filing services, credit rating agencies and securities brokers.
Regulatory bodies oversee different sectors within this industry to uphold transparency, ensure client safety and foster competition. These include independent agencies that license and regulate different companies in the sector, such as FINRA and the Office of the Comptroller of the Currency.
Many of the companies within this industry are highly profitable, owing to the fact that they help consumers manage their investments and finances. They also enable the growth of economies, which in turn creates more jobs and opportunities. This is why the government oversees the activities of financial services companies to protect the interests of consumers and promote economic prosperity.