US Finance: One Of The Most Important Industries
The USA is the world’s largest and most powerful nations. Almost every one of the world’s largest companies has either originated in or has a base in the USA. Knowing this, it is no wonder that the finance industry in the USA is one of the largest and most influential sectors.
The finance industry refers to a range of organizations and businesses that deal with the management of money. Some of these organizations include: credit card companies; insurance companies; banks; stock brokerages; investment funds; and consumer finance companies.
The financial services industry accounts for over 20% of the USA’s market capitalization according to the S&P 500.
One of the most important financial organizations in the USA, and indeed the world, are banks. Banks have many purposes to the public as well as the business world. As well as looking after money for their customers, they also offer loans, bonds and credit and debit cards amongst many other financial services. The majority of banks are retail banks that are available to the general public. Private banking is available to those that have a high net worth, and they usually have to have a certain amount of money to be eligible for private banking. Private banks generally offer a more personal service with extras such as tax planning and wealth management.
Another type of bank in the US are capital market banks that help assist companies to restructure their finance and debts. They help underwrite debt and equity and assist in company deals such as advisory services.
Another important part of the finance industry’s banking sector are merchant card providers. These are the companies that provide the credit card payment facilities to retailers and other businesses around the country.
The largest financial service company, and second largest commercial bank in America and in the world is the Bank of America. As well as in the USA, the Bank of America serves customers in over 150 countries.
With so many tourists, immigrants and international business travelers entering the USA every day, it is no wonder that a large part of the finance industry is made up of foreign exchange services. The main area in foreign exchange is currency exchange services, where people can change their currency into US dollars and vice versa. There are thousands of currency exchange locations throughout the USA, particularly in major cities and at airports. Another foreign exchange service available in the USA is wire transfers - for people who need to send money from the USA abroad to international banks. There are also foreign currency banks in America where banking can be done in currencies other than the US dollar.
Investment services are also a large part of the USA’s finance industry. Asset management, hedge fund management, and custody services are all important sectors. Asset management companies run collective investment funds, whereas hedge fund management companies usually employ the services of prime brokerage divisions at major banks in the USA to help with their trades.
Insurance is a major sector of the finance industry all across the world, and particularly in the USA. Insurance companies make a lot of money, and there are companies that cover all areas of insurance for all types of people and businesses. Even insurance companies have insurance - called reinsurance - that protects them if there are any serious losses.
There are numerous other areas of the finance industry, including venture capital; private equity funds; advisory services; conglomerates; and angel investments.
In terms of earnings and equity market cap, the financial industry is the largest sector in the USA, however in terms of revenue and number of employees. The largest financial company in the USA, Citigroup only accounts for 3% of the market share, whereas in contrast Starbucks has a 32% market share.
