Financial services are a major part of the modern world. They are essential to supporting healthy economies around the globe. The industry includes a wide variety of companies that help individuals and businesses save money.
The industry is regulated by government laws. This is important because consumers need to be sure that their money is being handled properly. They also need to trust the advice given. There are many community-based nonprofits that offer money management counseling and advice.
The financial sector includes a wide variety of options, including banking, investments, and insurance. Banks and other financial institutions promote saving, investment, and production. They also help protect people from natural hazards and business conditions.
Conglomerates are companies that operate in more than one area of the financial services industry. Some examples include life and health insurance companies, investment firms, and wholesale and retail banking. They may have lower economic capital than a single organization, but they can provide benefits such as diversification.
Financial service providers are responsible for transferring funds from savers to borrowers. They do this through loans and bonds. They earn profits from the difference between the amount of money the borrower pays back plus interest and the money the saver deposits. They also make loans to companies.
They may take on the risk that the borrower will not pay the loan. They are also able to redistribute the risk. A company with more experience in the financial services industry can be promoted.