Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, building societies, and credit-card companies. It also includes firms that provide investment products, insurance and mortgages, as well as those who support the financial sector, such as credit-reporting agencies and global payment providers.
Generally, the lines between different types of financial services are blurry. Banks, for example, once focused solely on lending but are now branching out into other areas to keep up with consumer demand. For example, they now offer more investment products like mutual funds and money market accounts. Securities firms, meanwhile, have bundled their broker services to form a “prime brokerage” designed to cater to hedge funds, while private banking provides high-net worth individuals with customized financial planning and management.
While some of these sectors are considered domestic, an increasing number of financial services have been outsourced to other countries and regions, particularly as larger, more established players acquire smaller competitors. For example, many international banks now handle the underwriting of debt and equity for multinational corporations seeking to expand abroad or to take over local entities, while structured finance involves creating intricate (and often derivative) products for high-net-worth individuals and institutions with more specific investment goals. Insurance is another area where foreign firms have gained a significant presence, managing the underwriting of policies for clients in their home markets. This trend is expected to continue as economies grow and consumers demand greater financial flexibility.