Financial services are the activities related to the making, investment and management of money for both people and businesses. These include banking, saving and investing, insurance and debt and equity financing. Financial services are also the backbone of a country’s economic growth as they promote saving, protect people from some of life’s most difficult circumstances, enable businesses to grow and expand nationally and internationally, and provide a stable medium of exchange.

One of the most well-known types of financial services are banks, which act as intermediaries between savers and borrowers. They collect money from savers in the form of deposits and offer a variety of products, such as checking accounts, savings accounts and credit cards, to meet their customers’ needs. Banks also lend money to borrowers by providing loans and lines of credit. When lending money, financial institutions assess the creditworthiness of borrowers and charge them interest on the borrowed funds.

In addition, financial services companies offer investment and advisory services to individuals and businesses. These firms help investors diversify their portfolios and maximize returns on their investments. They also provide advisory services to help individuals make informed financial decisions and plan for the future. Many large financial service providers are publicly traded companies that trade on the major stock exchanges. For example, the Berkshire Hathaway financial conglomerate owns GEICO, National Indemnity and General Re, three of the largest insurance companies in the United States.

Another important type of financial services are payment and settlement services. These include processing electronic fund transfers, issuing credit and debit cards and managing payment systems. Financial services companies also provide risk management solutions to protect individuals and businesses from financial risks such as death, injury, property loss or damage and liability. They do this by offering insurance products such as life and health insurance, as well as by advising businesses on how to minimize risk and improve their business processes.

People can benefit from financial services by having more control over their money, enjoying better physical and mental health and being able to save for the future. The good news is that there are a wide range of organizations that can help, from traditional banks to fintechs and pension providers. Increasingly, financial services companies are focusing on building their customers’ financial wellbeing, as they recognise that this is a win-win for everyone. They can do this by encouraging more people to talk about money, breaking the taboo around talking about it and educating them about how to save, invest and manage their finances effectively.

It is essential that all people have access to high-quality financial services. When more people feel in control of their finances, they are more resilient to life’s challenges, and are more likely to take responsible decisions about debt and how to save for the future. This can be achieved by promoting financial education, empowering people to get advice and support when they need it and making sure that the right financial services are available at the right time for them.