There are nine major types of financial institutions that provide a variety of services from mortgage loans to investment vehicles. As financialization continues to permeate our lives, it is increasingly likely that you will have an account or product offered by several of these types.
Nowadays, an increasing number of financial institutions operate online, which in some instances may reduce some of their services fees. The major categories of financial institutions include central banks, retail and commercial banks, internet banks, credit unions, savings, and loans associations, investment banks, investment companies, brokerage firms, insurance companies, and mortgage companies.
1. Central Banks
Central banks are the financial institutions responsible for the oversight and management of all other banks. In the United States, the central bank is the Federal Reserve Bank, which is responsible for conducting monetary policy and supervision and regulation of financial institutions.
Individual consumers do not have direct contact with a central bank; instead, large financial institutions work directly with the Federal Reserve Bank to provide products and services to the general public.
2. Retail and Commercial Banks
Traditionally, retail banks offered products to individual consumers while commercial banks worked directly with businesses. Currently, the majority of large banks offer deposit accounts, lending, and limited financial advice to both demographics.