Financial services put money to productive use, such as allowing individuals to invest in the next great technology or helping businesses buy equipment and expand. They also manage risks and facilitate payment transactions. Financial services companies include banks, credit unions and savings institutions; investment firms; insurance companies; debt and equity finance brokers; and securities research and brokerage firms. These companies offer a range of products and services, including deposit accounts, credit cards, loans and mortgages.
They also help people and companies manage their financial risks by providing products such as life, health and property insurance. They also offer reinsurance, which is insurance sold to insurers themselves to protect them against catastrophic losses. Financial services companies also operate credit-card networks and provide currency exchange and wire transfer services. They also manage the infrastructure of financial markets, including stock and derivatives exchanges, clearing houses and real-time gross settlement systems.
Financial services are a vital part of the economy. They ensure that the capital market remains active, which is an indication of healthy economic conditions. Without them, companies would not be able to acquire funds to boost their production and reap more profits in the future. This is because the flow of money is controlled by these companies. The presence of financial services is also responsible for the changing trends in the capital market. In addition, they assist in the growth of the broader economy by encouraging investments from other countries. In the case of emerging economies, this is especially important as it enables them to develop at a faster rate than their more developed counterparts.