What Does a Financial Services Company Do?

A financial services company is a business or company
which manages, invests, exchanges, or holds money on
behalf of clients. Many types of companies can be
considered to be in financial services, including banks,
insurance companies, and asset management firms,
among others. As money and finance become ever more
complex, there are an increasing number of activities and
enterprises a financial services company can be engaged
in.
The largest business in the world, in terms of the amount
of money that changes hands, is insurance. It is also one
of the oldest businesses. Insurance is considered a
financial service because it protects against the loss of
money or property, and because insurance companies
themselves often are involved very heavily in investment.

The premiums collected by an insurance company are
statistically not likely to have to be completely repaid.
After a while, an insurance company accumulates more
money from premiums than it has had to pay out in
claims, and this extra cash is referred to as “float.” It is
not uncommon for an insurance company to invest its
float in order to earn a return, and thus, in a way, insure
themselves.
Banks are another
very common type
of financial services
company. Banks
provide many
services and
products that all of
us have a degree of
familiarity with,
such as charge
accounts, checking,
electronic funds
transfers, and loans.
Many other services
are included within
the sphere of traditional or “commercial” banking.
Investment banks may provide many of these same
services, but also manage the assets of their clients in
large investment funds.

Foreign exchange is a type of financial service that is
often transacted on a small scale, often by small
businesses which operate out of airports or heavily
traveled port cities. Many commercial banks offer foreign
exchange services as well. These consist mainly of
trading one currency for another at its market value,
minus a commission. Large-scale foreign exchange
encompasses the arena in which banks buy and sell
substantial amounts of foreign currencies, and it is
sometimes engaged in by large investment funds and
even some individual traders.
No single financial services company has a very large
market share, due to the sheer number of these types of
companies in existence. For a financial services company
to have a two or three-percent market share is very
significant, because most have much less. Indeed,
because of the endless niches that this type of company

can operate in, market share is not fought for as much as
in other industries.
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