Financial services are a broad set of economic services provided by the finance industry. The sector includes a variety of businesses, such as credit-card companies, banks, and credit unions. These businesses provide financial services to individuals and businesses. Financial services are an important part of a healthy economy. Providing these services to customers is a vital way that these companies stay profitable.
Financial services provide businesses with capital and enable them to expand and diversify their businesses. For example, companies can raise funds through mutual funds, factoring, and credit cards. These services are important because they enable companies to increase their operations and diversify their funds, ensuring the economy remains vibrant. By providing these services, banks and other financial institutions can maintain and enhance their goodwill.
Financial services can be further divided into two main categories: personal/consumer financial services and corporate/commercial financial services. Some companies specialize in one or the other, depending on the needs of their customers. Many online and mobile-friendly financial services companies are also growing in popularity, offering benefits like reduced overdraft fees and higher APY accounts.
Financial services companies accept deposits and make loans, earning profit from the difference between the deposits and the loans. They also facilitate the transfer of funds and settle accounts. They also help companies and individuals raise funds by buying and selling securities, and lending funds to borrowers. Then they invest these funds for their clients.