Financial services provide people with the ability to invest their income and save, as well as borrow money for things like mortgages, home improvements, education and vehicles. They also safeguard personal assets by providing insurance against the loss of property or life, and help businesses with the capital needed to grow. A healthy financial sector is critical to a country’s economy, and it provides millions with jobs that allow them to support themselves and their families.

While most people think of banks, stock brokers and mortgage lenders when they hear the term “financial services,” the industry actually encompasses a much wider range of firms. These include investment companies, securities traders, credit-card issuers, banking services, insurance providers and many others. The industries that comprise the financial services sector vary in their focus, with some concentrated on direct savings and lending while others are more concerned with investing, insurance or the redistribution of risk.

The types of financial services available in a country depend on the economic climate, government regulations and business culture. For example, in the United States, consumer-oriented financial services are more prevalent than commercial or business services. This difference is mainly due to the fact that consumers are more interested in savings accounts and loans than stocks, bonds and other forms of investments.

A healthy financial services sector typically thrives in a balanced environment where interest rates increase moderately rather than rapidly, and there is a good balance between regulation and encouraging innovation. When those factors are in place, it’s possible for banks and other firms to offer competitive products that keep people from turning to competitors for their financial needs.