Financial services is a sector that provides economic services related to finance. The industry includes all businesses involved in providing services to manage and control financial assets, such as funds, investments, loans, credit and insurance. Financial services are vital to the health of any economy because they help individuals and companies make sound financial decisions. They provide money for mortgages and other expenses, allow people to save for retirement or unforeseen events and give millions of people solid employment.
The most well-known aspect of financial services is banking, which encompasses a wide variety of products and operations. Banks provide deposit accounts, credit cards and checking, as well as investment and commercial banking. As financial deregulations took hold in the 1990s, many banks began to offer more complex products such as mutual funds and investment brokerage. This trend continued as large financial conglomerates emerged that offered a full range of financial services to consumers and businesses alike.
Another important component of the financial services industry is insurance, which offers protection against the unexpected and unforeseen. It covers people against accidents and illnesses (health, life and disability insurance), property loss or damage (homeowners and car insurance) and liability and lawsuits.
Financial services also include other types of specialized business finance, such as private equity and venture capital which invest in promising companies in exchange for ownership stakes or profit participation, and provide consulting to businesses seeking to raise money from investors. Other specialized areas of the financial services industry include debt management, which helps customers reduce their outstanding debts by paying less than they owe in exchange for a lower interest rate; and asset management, which manages assets for high-net worth individuals or companies.