Financial institutions may provide a host of services to individual, corporate, and government clients. A retail bank accepts deposits, provides a vehicle for saving money at a rate of interest, and extends loan products, including mortgages, to qualifying customers. Large organizations provide financial institution services to other organizations, for example, assistance that includes underwriting equity deals and advising clients through major events, such as a restructuring or some type of business combination. Brokerage firms provide another type of service in the financial markets.
A primary service of a retail bank is to accept deposits from customers. It is prudent to use the financial institution services offered by a retail bank that offer some type of protection over the money that is deposited. In the U.S., for instance, the Federal Deposit Insurance Corporation (FDIC) is an insurance entity that was formed by the government to protect the financial deposits of customers up to a certain threshold. Traditional banks are not the only facilities that accept deposits as similar financial institution services may also be extended by investment brokerage firms that expand the business line into servicing checking and savings accounts on behalf of clients.
Brokerage firms provide financial institution services to investors. Industry professionals are certified stockbrokers who serve as intermediaries between investors and major exchanges, which are the platforms on which stocks trade. Stockbrokers may charge fees and commissions based on the volume of trades requested. Full-service stockbrokers are prepared to offer an element of investment advice to clients but charge higher fees for this service.
Insurance companies provide a type of financial institution services. These firms underwrite insurance policies to protect against loss, while individuals or organizations purchase policies to guard against an unfortunate occurrence. Policyholders make consistent payments and become entitled to the intended financial benefit at the appropriate time. Insurance policy services could protect against automobile accidents, theft, or fire or water damage to a home, for instance. By underwriting policies, insurance companies take on acceptable risk, and policyholders agree to make premium payments for the life of the contract.
Investment banks are in the business of offering financial institution services. Among those offerings, these large firms may facilitate an initial public offering (IPO) on behalf of a corporate client. This includes underwriting the equity securities by pricing, marketing, and selling a new stock to the public. Investment banking services also include advising clients through restructurings, in which business divisions may need to be realigned and debts restructured.