Facilitates transaction :

Financial services facilitate the smooth functioning of transactions in

an economy. Various financial instruments such as debit cards, credit
cards, cheque, bill of exchanges and many more assist people in
doing payments.

Acts as a link b/w savers and investors :

The financial services act as a channel between the savers and the
spenders. It is a channel to collect the idle resources that are lying
with the public and bring them into effective use.

Liquidity :
The financial service industry promotes liquidity in the financial
system by allocating and reallocating savings and investment into
various avenues of economic activity. It facilitates easy conversion of
financial assets into liquid cash.

Mobilizes savings:
Mobilization of people’s savings is another important role played by
financial services. It brings together those who have excess ideal lying
resources and one who are in need of funds for investing into
productive means.

Minimizes risk :
One of the biggest tasks performed by financial services is the
optimization of risk through diversification. They pool the resources of
the investors and allocate in such a manner that overall risk is
mitigated.
Financial services also bring down the risk in the market by ensuring
that all the participants have access to the required information, and
there is no disparity.
Capital allocation : It enables people to allocate their fund into
efficient sources. Financial services provide various investment
options to customers like mutual funds, stocks, saving and fixed
deposits which can generate income for them.

Reduce Cost of Transaction and Borrowing: The financial services

industry creates an infrastructure that lowers the cost of transaction
and borrowing costs for borrowers.It also increases the return that
investors make by lending to borrowers. It leads to a saving mindset in
the economy and thus helps in increasing growth prospects through
the efficient use of resources.These resources are used as cheap and
affordable loans for the growing needs of the industry.

Generates employment : Financial services helps in creating more

employment opportunities in a country. There are large numbers of
people who are associated with financial institutions selling these
services. Such institutions via selling financial services generate their
income and pay remuneration to their employees.

Economic Growth: The financial service industry mobilises the

savings of the people, and channels them into productive investments
by providing various services to people in general and corporate
enterprises in particular. In short, the economic growth of any country
depends upon these savings and investments.

Capital formation: Financial service industry facilitates capital

formation by rendering various capital market intermediary services.
Capital formation is the very basis for economic growth.