Financial services are a broad sector that includes everything from insurance and money management to payments and digital banking technology. It also includes small community banks and nonprofits, as well as the people who work in them.
The financial services industry is a critical component of our national infrastructure, and the risks it faces are often complex. From massive power outages and natural disasters to cybersecurity threats, the finance sector is vulnerable to a wide range of challenges.
Banking and Insurance
The primary focus of the financial services industry is to help people save and borrow money. This means accepting deposits, making loans, and facilitating transactions using checks, credit and debit cards, and electronic funds transfer. Banks earn revenue mainly on the difference between what they pay depositors and what they receive from borrowers.
Other services include administration of payment systems, trading, and investment management. The insurance industry offers protection against death or injury (e.g., life insurance) and against property loss or damage (e.g., homeowners insurance).
Investing and Venture Capital
The investment and venture capital industry is the largest subsector of financial services. Private equity funds, venture capital providers, and angel investors provide capital to companies in exchange for ownership stakes or profit participation. They also supply investment capital for a variety of projects, including mergers and acquisitions. They also invest in securities, foreign exchange, and derivatives.