Financial services are the companies that provide investment products, insurance, credit, and banking, among other things. These include credit unions, credit-card networks, and global payment providers like Visa and Mastercard. They also include stock and bond markets, accounting firms, tax preparation services, and depository banks.
In addition to offering these products and services, many in the industry have a strong focus on innovation. This is particularly true for the tech giants that have entered the space in recent years, such as Apple and Amazon. These companies are introducing their own digital cards, which can cut the interchange fees that merchants pay to card issuers and networks—a $90 billion annual source of revenue for these firms. They are also experimenting with in-store payments to lure merchants away from the existing players, which could further drive down the costs of these transactions for card issuers and networks.
As an industry, the financial services sector thrives in a low interest-rate environment and one that balances regulation with the freedom for firms to innovate and offer creative new products. This type of business climate encourages people to save more, which in turn fuels growth and allows businesses to expand, hire more employees, and ultimately raise wages for their workers.
It also provides people with access to loans for mortgages, cars, or education, and safeguards their health and property through insurance policies. And it makes possible the big transactions that occur in business, such as mergers and acquisitions, venture capital funding, and private equity investments.