Financial services are economic services tied to finance provided by financial institutions. Financial services encompass a broad range of service sector activities, especially as concerns financial management and consumer finance.

The finance industry in its most common sense concerns commercial banks that provide market liquidity, risk instruments, and brokerage for large public companies and multinational corporations at a macroeconomic scale that impacts domestic politics and foreign relations. The extragovernmental power and scale of the finance industry remains an ongoing controversy in many industrialized Western economies, as seen in the American Occupy Wall Street civil protest movement of 2011.

Styles of financial institution include credit union, bank, savings and loan association, trust company, building society, brokerage firm, payment processor, many types of broker, and some government-sponsored enterprise.[1]

Financial services include accountancy, investment banking, investment management, and personal asset management.

Financial products include insurance, credit cards, mortgage loans, and pension funds.

Financial Services Authority Seychelles logo on building


See also: Global financial system § History of international financial architecture

Change in access to a financial account or services between 2005 and 2014 by country[2]

The term "financial services" became more prevalent in the United States partly as a result of the Gramm–Leach–Bliley Act of the late 1990s, which enabled different types of companies operating in the U.S. financial services industry at that time to merge.[3]

Companies usually have two distinct approaches to this new type of business. One approach would be a bank that simply buys an insurance company or an investment bank, keeps the original brands of the acquired firm, and adds the acquisition to its holding company simply to diversify its earnings. Outside the U.S. (e.g. Japan), non-financial services companies are permitted within the holding company. In this scenario, each company still looks independent and has its own customers, etc. In the other style, a bank would simply create its own insurance division or brokerage division and attempt to sell those products to its own existing customers, with incentives for combining all things with one company.[citation needed]

Relationship to the government

The financial sector is traditionally among those to receive government support in times of widespread economic crisis. Such bailouts, however, enjoy less public support than those for other industries.[4]


Main article: Bank

Commercial banking services

Main article: Commercial bank

A commercial bank is what is commonly referred to as simply a bank. The term "commercial" is used to distinguish it from an investment bank, a type of financial services entity which instead of lending money directly to a business, helps businesses raise money from other firms in the form of bonds (debt) or share capital (equity).

The primary operations of commercial banks include:

The United States is the largest commercial banking services location.

Investment banking services

Singapore financial district by night (25449263528)

Main article: Investment banking

New York City and London are the largest centers of investment banking services. NYC is dominated by U.S. domestic business, while in London international business and commerce make up a significant portion of investment banking activity.[5]

Foreign exchange services

Foreign exchange machine

FX or Foreign exchange services are provided by many banks and specialists foreign exchange brokers around the world. Foreign exchange services include:

London handled 36.7% of global currency transactions in 2009 – an average daily turnover of US$1.85 trillion – with more US dollars traded in London than New York, and more Euros traded than in every other city in Europe combined.[6][7][8][9][10]

Investment services

New York City is the largest center of investment services, followed by London.[12]


Main article: Insurance

National Insurance Services (NIS) – St. Vincent ^ the Grenadines – panoramio

The United States, followed by Japan and the United Kingdom are the largest insurance markets in the world.[14]

Other financial services

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Financial exports

A financial export is a financial service provided by a domestic firm (regardless of ownership) to a foreign firm or individual. While financial services such as banking, insurance, and investment management are often seen as domestic services, an increasing proportion of financial services are now being handled abroad, in other financial centres, for a variety of reasons. Some smaller financial centres, such as Bermuda, Luxembourg, and the Cayman Islands, lack sufficient size for a domestic financial services sector and have developed a role providing services to non-residents as offshore financial centres. The increasing competitiveness of financial services has meant that some countries, such as Japan, which were once self-sufficient, have increasingly imported financial services.[citation needed]

The leading financial exporter, in terms of exports less imports, is the United Kingdom, which had $95 billion of financial exports in 2014.[15] The UK's position is helped by both unique institutions (such as Lloyd's of London for insurance, the Baltic Exchange for shipping etc.)[16] and an environment that attracts foreign firms;[17] many international corporations have global or regional headquarters in the London and are listed on the London Stock Exchange, and many banks and other financial institutions operate there or in Edinburgh.[18][19]

See also


  1. ^ Asmundson, Irena (28 March 2012). "Financial Services: Getting the Goods". Finance and Development. IMF. Archived from the original on 5 November 2015. Retrieved 8 September 2015.
  2. ^ "Access to a financial account or services". Our World in Data. Archived from the original on 15 February 2020. Retrieved 15 February 2020.
  3. ^ "Bill Summary & Status 106th Congress (1999–2000) S.900 CRS Summary – Thomas (Library of Congress)". Archived from the original on 2013-08-12. Retrieved 2011-02-08.
  4. ^ The Economist, April 4th 2020, page 51.
  5. ^ Roberts, Richard (2008). The City: A Guide to London's Global Financial Centre. Economist. p. 2. ASIN 1861978588.
  6. ^ "Research and statistics FAQ". The City of London. Archived from the original on 26 September 2011. Retrieved 23 February 2012.
  7. ^ "Triennial Central Bank Survey – Foreign exchange and derivatives market activity in 2004" (PDF). Bank for International Settlements. March 2005. Archived (PDF) from the original on 2010-12-17. Retrieved 2018-03-05.
  8. ^ "Key facts Archived 4 February 2012 at the Wayback Machine", Corporation of London. Retrieved 19 June 2006.
  9. ^ European Central Bank (July 2017) "The international role of the euro" Archived 2019-09-21 at the Wayback Machine. European Central Bank. p. 28.
  10. ^ Chatsworth Communications (April 6, 2016) "London's leading position as a USD 2.2 trillion hub for FX trading would be harmed by a Brexit, according to poll of currency market professionals" Archived 2018-09-22 at the Wayback Machine. Chatsworth Communications.
  11. ^ "Prudential: Securities Processing Primer" (PDF). Archived from the original (PDF) on 2007-03-16. Retrieved 2010-12-05.
  12. ^ "Asset Management in the UK 2016–2017" (PDF). The Investment Management Association. September 2017. p. 12. Archived from the original (PDF) on 6 March 2018. Retrieved 5 March 2018.
  13. ^ "Price comparison sites face probe". BBC News. 2008-01-22. Archived from the original on 2009-01-30. Retrieved 2009-02-06.
  14. ^ "UK Insurance & Long Term Savings Key Facts 2015" (PDF). Association of British Insurers. September 2015. Archived (PDF) from the original on 5 March 2018. Retrieved 5 March 2018.
  15. ^ "UK trade surplus in financial services highest ever". TheCityUK. 21 July 2015. Archived from the original on 8 September 2015. Retrieved 5 June 2015.
  16. ^ Clark, David (2003). Urban world/global city. Routledge. pp. 174–176. ISBN 0415320976. Archived from the original on 2023-02-10. Retrieved 2020-09-23; Shubik, Martin (1999). The theory of money and financial institutions. MIT Press. p. 8. ISBN 0262693119. Archived from the original on 2023-02-10. Retrieved 2020-09-23.
  17. ^ Roberts, Richard (2008). The City: A Guide to London's Global Financial Centre. Economist. pp. 1–22. ISBN 9781861978585. Archived from the original on 2023-02-10. Retrieved 2020-11-11.
  18. ^ "UK's financial services trade surplus biggest in the world, dwarfing its nearest rivals". TheCityUK. 3 July 2014. Archived from the original on 11 July 2014. Retrieved 5 June 2015.
  19. ^ "Special report on services exports" (PDF). EY Item Club. June 2014. Archived (PDF) from the original on 4 March 2016. Retrieved 8 September 2015.

Further reading