5 Types of Major Financial Institutions

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5 Types of Major Financial Institutions

Financial institutions (FIs) provide monetary intermediary services. Simply put, they help people and businesses handle anything related to money. This can be from easy tasks like saving, spending, or receiving, to more complicated ones like loaning and investing.

There are different types of FIs; while there are some that can do typically everything, there are also institutions that specialize in specific tasks. By learning what these are, you’ll know which establishment will best help you with your financial needs.

Commercial

FIs that can do pretty much everything is commercial banks (CBs). They’re privately owned organizations and work directly with consumers, whether they’re individuals or institutions.

Commercial personal banking in Fife Lake, MI, offer general banking services, including:

  • Checking and savings
  • Deposits
  • Credit banking
  • Business banking
  • Mortgage Loans
  • Personal Loans
  • Financial Advice

Internet

For easy access to your accounts from anywhere, consider digital CBs. Internet banks offer the same services as their brick and mortar counterparts, like deposits, checking, and savings, except that the process is done on online platforms instead.

Aside from being a mobile CB, internet banks also have their unique benefits, like:

  • 24/7 account access
  • Electronic transfer
  • Online transactions
  • Viewable account history

Credit Union

A credit union is another CB-like institution; instead of dealing with the general public, credit union associations focus more on select demographics like teachers, police officers, or military personnel. Members of the association pool their money so they have the funds to function like a CB. A portion of the collected amount is then invested in different programs, allowing the participants to earn a profit.

Credit union associations are 100% owned and operated by their members. This means they belong to the non-profit establishment category of the population who enjoy tax exemption.

Investment

The services of investment banks are financial advisory based. People, businesses, and governments go to these FIs for assistance with issuing securities – a fungible financial instrument that represents company ownership (stock). The securities are then sold to investors so the issuing individual or institution can earn or raise capital.

Brokerage

If investment banks help sell securities, then brokerage firms are the ones who buy them. They work on a virtual market for securities, called the stock exchange, and assist investors with purchasing stocks. During the process, the investor, the broker, and the issuer can all gain profit, making it a great way for institutions and individuals to earn money.

Aside from stocks, brokerage firms also buy and resell bonds, mutual funds, and exchange-traded funds (ETFs) among other types of investments.

These are the different types of financial institutions you can go to for your unique financial needs. If you’re interested to start, head over to your nearest personal banking service in Fife Lake MI, today.

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