Financial services companies play an important role in the economy, and have the potential to provide a range of vital services to millions of customers. However, they need to stay competitive or risk being overtaken by new, more agile competitors. This means building and leveraging partnerships with other organizations to expand their product offerings and services. Partnerships can also help them increase their customer base by putting their name and product in front of customers when they are most likely to need it.
Companies involved in financial services include banks, credit unions, insurance companies, brokerage firms, investment banks, and asset management companies. Many are also active in more than one area. Some conglomerates are involved in retail, wholesale, and investment banking as well as life, health, and general insurance. Although these conglomerates can provide significant diversification benefits, they can also have a lower economic capital than their separate parts.
Some financial services companies have a long history. They have evolved to meet a changing society. Some have grown by leveraging their status in the market and becoming international players. Founded in 1864, Royal Bank of Canada offers a variety of financial services worldwide. Today, it serves 16 million clients in Canada, the U.S., and 34 other countries.
The financial services industry is vast, covering a variety of different needs for individuals and corporations. It includes large conglomerates and small, independently owned businesses, long-standing financial institutions, and the latest fintech startups. It’s estimated to be worth $22.5 trillion by 2022. This industry is a major one, and one that is undergoing massive change due to the proliferation of technology.
Many investment services act as financial planners, and you can even find free investment apps such as Stash, Webull, and Ally Invest. Insurance companies are another popular form of financial services. These services can help protect what matters most to you, as well as businesses from unforeseen downturns. They offer a variety of types of insurance, and many specialize in specific industries or situations.
Despite the popularity of the stock market, banks do not provide the majority of financial services. Instead, they facilitate the movement of funds to and from their clients. Mortgage loans, for example, are a product, while investment bank services handle a variety of other services. As a result, financial services companies are important to the economy.
Apart from enabling companies to grow and diversify, financial services also allow financial institutions to raise funds and disburse them in the most profitable manner. Mutual funds, factoring, credit cards, and hire purchase finance are just a few examples of the types of financial services. The financial services industry is present in virtually every developed country. However, financial services companies tend to cluster in international and national financial centres.
