Financial services are economic services provided by the finance industry, which encompasses a broad range of service sector firms that provide financial management. These include credit unions, banks, credit-card companies, insurance providers and a host of other specialized agencies. Financial services are vital to the functioning of any economy. Without them, people would have difficulty channeling cash from those with money to those who need it, and distributing risk among savers and borrowers. Without financial services, it may be difficult to finance investments in things like factories, cars and houses. And without financial services, it might be impossible for individuals to protect themselves against risks like death and illness (life and disability insurance), property loss and damage (homeowners and car insurance) or against liability and lawsuits (personal lines insurance such as home and auto).
Financial goods are physical objects that last a long or short time—like furniture or cars. But a financial service is not the same thing as a financial good; rather, it involves the process of acquiring the financial good. For example, obtaining a mortgage to buy a house is one type of financial service, while the issuance and processing of credit cards or the delivery of notary services are also types of financial services.
Other financial services include reinsurance, the issuance and trading of securities (stocks, bonds and commodities), financial leasing, telecommunications for the transfer of funds between banks and other entities, and the provision of critical financial market utilities such as stock exchanges, clearing houses and real-time gross settlement systems. Investment banking, mergers and acquisitions, underwriting debt and equity, and corporate advisory services are other key areas within the financial services industry.