The types of financial institutions include commercial banks, investment banks, insurance companies, brokerages, investment firms, management investment companies and non-bank financial institutions including credit unions, payday lenders and savings and loans institutions. Financial institutions perform various financial transactions, such as loaning, lending and brokering money. They exist for general purposes, like giving consumers a safe and convenient storage place for money, and for specific reasons, such as providing financial security in the event of accidents and personal losses.
Commercial and private banks classify as lending institutions, but they perform different roles. Commercial banks generally operate on a larger scale, managing bank accounts nationally and internationally. These banks enable wire transfers to other lending institutions and across national and international boundaries, making them convenient for customers worldwide. Commercial banks perform many services relating to money and finance, such as issuing checks and credit cards and making loans. These banks establish payment systems between consumers and large merchants and retailers, facilitating purchases and transactions. Private banks offer services primarily for government entities and businesses. They research and offer financial advice for companies, lend money and provide underwriting services.
Insurance companies require payments for certain aspects of life, such as homeowner ship and automobiles. They offer packages based on activity and risk, pooling the risks of groups with similar risks. Brokerage firms facilitate securities transactions, while investment firms professionally manage stock portfolios.