Financial services is an industry that includes a wide variety of businesses, including banks, mortgage lenders and brokerage firms. It also includes insurance companies, securities traders and investors.
The presence of these financial institutions in a country enables the economy to grow and develop. It helps consumers get access to products and services through hire purchase and loans, and allows producers to raise capital and increase production.
Banks and other financial service providers earn revenue primarily through the difference between the interest rate charged on credit accounts and the interest they pay on depositors’ money. This is a key source of income for large commercial banks and community banks as well.
A strong financial services sector leads to economic growth, which in turn increases consumer confidence and purchasing power. But when the sector fails, it can drag down a country’s economy.
Banking is the primary sector of the financial services industry. It involves handing deposits into checking and savings accounts and lending them to customers. Most banks are required to keep a certain percentage of their deposits on hand and available for loans, but they can earn interest on the rest.
Insurance is a critical aspect of the financial services industry, as it provides protection from unforseen events that could destroy an individual’s assets and income. It’s important to work with a qualified professional who can do a proper risk analysis and obtain the appropriate policy at the best price.