When most people hear the term financial services sector, the first thing they're likely to think of is the hustle and bustle of Wall Street. But there's more to the industry than just stock trading, investment services, and big banks. In fact, the financial sector includes a broad array of different types of financial services companies. What's more, financial services companies are often considered to be one of the most important parts of the economy in many different countries.
Companies in this sector range from investment firms and brokerage houses, banks and insurance firms to credit and payment processing companies and real estate companies, to name but a few, They serve retail and commercial consumers alike. Two simultaneous trends characterize the financial services industry. One is specialization, where companies provide targeted services to customers. The other is globalization, or the expansion of firms into developing countries and emerging market nations.
- Berkshire Hathaway was formed in 1839 and its stock is one of the most expensive in the world.
- American Express focuses on credit card offerings, co-branded cards with hotels, and other travel services like traveler's checks.
- Wells Fargo is one of the largest U.S. banks by market capitalization and is among the largest 100 corporations in the United States.
- E-Trade was one of the first online discount brokerage firms to target self-directed investors.
- Financial services companies facilitate banking, investing, credit card transactions, loans, and more.
Watch Now: The Financial Services Sector Explained
This article looks at some of the biggest names in the financial services sector. Keep in mind, the list below isn't a comprehensive compilation of financial services companies. In fact, such a roster would be seemingly endless. To give the topic focus, we've highlighted four major companies in the sector.
1. Berkshire Hathaway
- Founded: 1839 (as Valley Falls Company)
- Headquarters: Omaha, Nebraska
- Chief Executive Officer: Warren Buffett
- Market Capitalization (as of March 2022): $785.52 billion
Many people have heard of Berkshire Hathaway (BRK-A), the company headed by Warren Buffett, one of the world's richest individuals. The company's stock is one of the most expensive in the world and trades on the New York Stock Exchange (NYSE).
Berkshire Hathaway was founded in 1839 as the Valley Falls Company in Rhode Island and was originally a textile manufacturing company. Buffett's involvement began in 1962 when he started buying shares in the company before assuming full control a few years later.
Berkshire Hathaway has an established record of financial success with companies that it has acquired over the years. The multinational conglomerate was initially composed of insurance companies that included GEICO and National Indemnity. It has expanded its holdings to include companies involved in real estate, transportation, the furniture industry, and several jewelry companies—notably Helzberg Diamonds. This financial services company also diversified into the confectionery, newspaper publishing, retail, and utility industries.
2. American Express
- Founded: 1850
- Headquarters: New York City
- Chief Executive Officer: Stephen Squeri
- Market Capitalization (as of March 2022): $143.42 billion
American Express (AXP) is one of the oldest financial firms in America, dating back to 1850. Originally, it offered freight forwarding services. Subsequently, it began providing travel services. It became one of the first companies in the world to offer charge cards and is commonly recognized by its signature gladiator logo adopted in 1958. Today, American Express, or Amex as it's more commonly known, is a Fortune 100 company and a component of the Dow Jones Industrial Average (DJIA).
American Express continues to prosper despite competition from major rivals Visa and MasterCard, which have more aggressive credit card marketing strategies. The company has focused its attention on its credit card offerings, creating a number of co-branded cards with hotels. It provides other travel services such as traveler's checks and has ventured into the prepaid card business. The elite status of American Express is demonstrated by its ability to offer a premium Centurion card that can be had for a hefty $10,000 initial fee and a $5,000 annual fee.
The global financial services market is expected to reach $26.5 trillion by 2022.
3. Wells Fargo
- Founded: 1852
- Headquarters: San Francisco, California
- Chief Executive Officer: Charles Scharf
- Market Capitalization (as of March 2022): $192.25 billion
Wells Fargo (WFC) is a global bank and financial services company with retail and commercial banking locations across the U.S. It also has a presence in Hong Kong, London, Singapore, and Tokyo. The company is one of the largest banks by market capitalization in the United States and is among the largest 100 corporations in the United States.
Despite its success and position within the sector, the company has had its fair share of scandals. One of the most notable involved branches opening 1.5 million checking, savings, and credit card accounts without the consent of customers. This was widely reported in 2016 and, as a result, Wells Fargo was slapped with $185 million in fines.
4. E-Trade Financial Corporation
- Founded: 1982
- Headquarters: Arlington, Virginia
- Chief Executive Officer: Michael Pizzi
E-Trade Financial Corporation (ETFC) was founded in 1982 in Palo Alto, California. Originally a private company, E-Trade went public through an initial public offering (IPO) on Aug. 16, 1996. The company was one of the first online discount brokerage firms targeting self-directed investors. It has continued to expand its business rapidly despite an influx of competition from older, much more well-established firms such as Charles Schwab.
E-Trade has garnered industry awards for its trading platform and consistently ranks in the top three online discount stock brokerage firms in the U.S. Along with acquiring a number of other online brokerage firms, E-Trade has grown its business by offering banking services to its clients, notably sweep accounts that allow for automatic transfers back and forth between savings, checking, and brokerage accounts.
On Feb. 20, 2020, Morgan Stanley announced it would acquire E-Trade in an all-stock deal totaling $13 billion. The combined company would result in more than eight million client relationships totaling $3.1 trillion in client assets. The acquisition finalized on Oct 2, 2020.
What Are Some Examples of Financial Services?
There are a variety of financial services offered by companies in the financial sector around the world. These include services relating to banking, brokerage, mortgages, credit cards, payment services, real estate, taxes and accounting, and investment funds.
What Is the Biggest Financial Services Company?
Market capitalizations change all the time and, as a result, so do rankings. However, with a recent market capitalization of $485.99 billion, Visa tops the list of the biggest financial services companies.
What Is the Largest U.S. Bank by Market Capitalization?
Based on a recent market capitalization of $416.08 billion, JP Morgan is the largest U.S. bank.