Financial services are a crucial part of the economy that allows people to make large purchases with loans and mortgages, save for future goals with investment accounts and products like mutual funds and credit cards, safeguard their property with insurance policies and create jobs. Typically, the financial services industry thrives when interest rates rise moderately rather than rapidly and there is a balance between enough regulation to keep consumers’ money and rights safe but also enough freedom for companies to innovate and expand their offerings.
A healthy financial services sector provides the foundation for economic growth. Consumers can purchase homes and cars with loans and financing from banks and other institutions. They can invest in businesses and products that generate profit by working with financial services companies such as merchant bankers, who facilitate new issue markets and help producers raise capital for production. Consumers can then use those profits to buy goods and services from those companies, creating a virtuous circle of economic expansion.
Many independent agencies exist to regulate the financial services industry and ensure transparency and fairness for everyone involved. These include the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA) and Office of the Comptroller of the Currency. Many financial services companies are conglomerates that offer a wide range of products and services. These companies often have dedicated departments that specialize in each of the different sectors they offer. Examples of such bundled financial services are investment banking, commercial banking, private banking and prime brokerage.