What Are Financial Services?

Financial services put money to work, turning it into goods and services that consumers want. These services include deposit-taking, lending, investing, and a host of financial intermediation activities. For example, banks provide the deposit channel, while investment firms supply the investing channels; insurance companies provide risk pools that allow individual policy holders to shed some of their own risks. These and other intermediation functions are important to economies because they enable people to pool resources and thus achieve greater economic gains than they could on their own.

A good definition of a financial service is the process of acquiring a financial good, rather than the product itself. For example, a mortgage loan is a financial good, but the underlying processes involved in securing that mortgage—like appraisals and inspections—are also financial services. Another example is a brokerage service that buys and sells securities on behalf of clients.

The industry is changing rapidly, driven by new technology and globalized markets. In the future, it will be crucial for these organizations to find a balance between keeping consumer confidence high and introducing innovative products and services that will drive growth. This will require a solid understanding of customer needs and an ability to anticipate how these tools and services will change in the future. It will also require a culture of learning and a willingness to adapt. Many financial services firms offer continuing education opportunities and encourage their employees to be lifelong learners, so they can keep up with the fast-changing industry.

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