Key Functions of Financial Services
Financial services are the economic services provided by the finance industry which encompasses a broad range of service sector firms that deal with money and investments. These include credit card companies, banks, investment funds, credit unions and insurance firms.
These services are important to the economy because they allow individuals, businesses and governments to raise and manage money efficiently. They also help in distributing the available money to all sectors of the economy in an equal and balanced manner for growth and development. This is important because it ensures that all sectors grow at a steady pace and does not lead to over inflation or deflation.
Some of the key functions that these financial services provide are;
Banks – Accept deposits and repayable funds and make loans. They are middlemen between depositors and borrowers and earn a profit from the difference between what they pay to the depositors and what they receive from the borrowers.
Investment services – Provide advice and access to investment products like mutual funds and stocks. They also offer brokerage and wealth management services.
Insurance services – Assist clients in managing risks and protecting their assets. They offer various types of insurance policies to clients such as life, health and property insurance.
Other services – Provide assistance with the buying and selling of goods and commodities such as coffee or oil. They also buy and sell debt securities like bonds. They can also offer structured finance services which help with financing mergers and acquisitions by underwriting debt or equity. They can also offer private banking services to high net worth individuals.