Financial services are the economic services provided by the finance industry, which encompasses a broad range of service sector firms that provide financial management, including credit unions, banks, investment funds, insurance companies and other credit-based intermediaries. This industry sector is a vital part of the economy, as it includes a variety of businesses that facilitate direct savings and investments, risk-sharing, and the redistribution of capital.
It also encompasses a number of payment services, such as credit-card networks and the systems that support them, global payments, money transfer and remittances, and financial exchanges that allow people to buy and sell securities, currencies and commodities. The financial services industry also includes asset management, which manages pensions, insurance assets and hedge funds.
A key distinction is that a financial good is something you possess (like a house or a car), while a financial service is the transaction that supports the ownership of the good (such as the mortgage loan or auto insurance policy). Many of these goods and services are delivered by large conglomerates in the banking, insurance, and consumer finance industries, but there are also plenty of smaller and niche players.
Because of the importance of the sector, governments oversee its operation, including licensing and regulation. These regulations can be a good thing, but they can also restrict innovation and growth. In addition, stress levels are high in some of the jobs within this sector, and a lack of work/life balance can be problematic.