What Is a Financial Institution (FI)?

Finance
#1

A financial institution (FI) is a firm that specializes in financial and monetary activities including deposits, loans, investments, and currency exchange. Financial institutions, which include banks, trust companies, insurance companies, brokerage firms, and investment dealers, cover a wide variety of commercial operations in the financial services industry. Almost everyone in a modern economy needs the services of financial institutions on a regular or semi-regular basis.

#2

A Financial Institution is the broadest term (umbrella term) for an organisation that acts as a channel between savers, bowers and providers of capital. They can be further broken down into two main types:

  1. Depository Institutions such as Banks and Credit Unions which allow savers to earn interest and borrows provided with loans

  2. Non-Depository Institutions such as Insurance Companies and Mutual Funds which sell policies to transfer risk of loss or shares in collective diversified portfolios.