The financial services sector plays an important role in supporting healthy economies in many countries. It includes banking, insurance and investment products. This industry helps individuals, corporations and government organisations to save, invest and make money.
Banking is the process of depositing money and lending money. Commercial banks provide loans to consumers and businesses. They also underwrite public and private debt. Banks earn revenue through interest rates, fees and commissions.
Insurance services offer protection against unforeseen events, such as loss of life or injury. In addition, they help policy holders with large, unforeseen expenses. These services include medical coverage, liability and property damage protection.
Investment services include advisory and wealth management services. Some of the products offered by these companies include hedge funds and retirement planning. Companies in the industry also include structured finance, which develops complex derivative products for high net worth individuals.
Digital distribution platforms are reshaping the financial services industry. These platforms are creating new customer offerings and allowing firms to access new customers.
Conglomerates are active in a wide range of financial services sectors. They can be active in investment, wholesale and retail banking, and health and life insurance.
These firms also offer asset management and asset diversification. However, they may not have enough economic capital to fully compete in all areas.
Regulations exist to protect consumers, as well as to ensure fair treatment. For example, the Federal Deposit Insurance Corporation (FDIC) insures deposits to keep banks from running out of cash.