It's difficult to know the precise size of the global financial services sector. This is a large group of industries related to banking, lending, and the management of wealth and funds. However, there are few comprehensive metrics for the size of the entire sector. The World Bank itself only collects data from 189 countries and estimates the rest. Meanwhile, the definition and scope of industries that fall within the financial services sector are not consistent among data sources.
Furthermore, reporting is not that readily available on a regular basis or compiled on a global scale in specific financial sector terms. Without a doubt, determining what numerical measurement is the best way to represent the size of a sector has been a subject of much debate.
The following are some ways to measure the size of the financial services sector.
Key Takeaways
- The financial sector involves a large group of industries associated with banking, lending, insurance, investment, and other business activities related to the allocation of wealth and money.
- There are few comprehensive metrics on the global finance sector, and the only way to measure its size is through estimation.
- Financial services are a bedrock for many other industries that rely on loans and credit in order to operate.
- There are several different metrics for estimating the size of the finance sector, such as by Assets under Management (AUM), the market capitalization of financial companies, or the size of the market.
- Although results vary, most estimates place the financial services sector at around 20-25% of the world economy.
A Growing, Shifting Sector
Market estimates project that by the end of 2021, the financial services market is likely to reach $22.5 trillion, growing at a rate of 9.9% from the previous year. This is lower than previous projections, due to the recession caused by the coronavirus pandemic. With global GDP expected to reach $93 trillion in the same year, that would mean that financial services comprise about 24% of the world's economy.
This represents a significant improvement over the financial sector of 2010, which was then struggling to recover from the Great Recession. The sector is expected to grow and shift to mobile and online banking as Millennials and Generation Z become more economically powerful. This growth has led to an increase in funding for startups and fintech companies looking to compete for a share of that business.
Banking and Investment
Another way to estimate the size of the financial services sector is by measuring the banking sector. The global banking sector had an estimated market capitalization of 7.3 trillion euros in the first quarter of 2021, equivalent to $8.58 trillion. Global market capitalization, or the combined value of every listed company on every stock exchange in the world, is estimated to be $56 trillion. Using these metrics, the banking sector accounts for 14% of the global economy.
However, this is an incomplete measurement because it only measures banks whose shares are publicly traded. It will not include information on private banks, government-owned banks, or fintech companies.
Another statistic worth assessing is assets under management (AUM). AUM is a figure that captures the total amount of assets managed by an investment company for its clients. In 2020, global AUM reached $103 trillion, according to Boston Consulting Group. With total global wealth estimated at $431 trillion, that means that the banking and investment sector accounts for just under a quarter of the world's assets.
Financial services are the backbone of the world economy, since most companies rely on credit or loans in order to operate.
Insurance Sector
Another important leg of the financial sector is the insurance industry, which helps companies moderate their business risks. Insurance companies have continued to see growth, particularly in the Eastern part of the world. It is expected that by 2029, Asia-Pacific will account for 42% of global premiums, with China making up 20% of that figure. As of 2020, the U.S. made up 29% of world premiums and China made up 11%.
Worldwide, gross written premiums were projected to reach $5.8 trillion by 2020. With global GDP estimated at around $84.5 trillion for that year, this means that the insurance industry accounts for an additional 6.8% of all economic activity.
The Bottom Line
Although it is difficult to obtain specific figures, the financial services sector is a major building block of the world economy. It consists of banks, investment firms, and insurance companies, all of which play a large role in the workings of the market.
There are several different ways to measure the size of the financial services sector in relation to the world economy. While these estimates vary, most put the financial services sector at around a quarter of the world's economy.
FAQs
There are several different metrics for estimating the size of the finance sector, such as by Assets under Management (AUM), the market capitalization of financial companies, or the size of the market. Although results vary, most estimates place the financial services sector at around 20-25% of the world economy.
What percentage of the economy is financial services? ›
In 2020, finance and insurance represented 8.3 percent (or $1.7 trillion) of U.S. gross domestic product. Leadership in this large, high-growth sector translates into substantial economic activity and direct and indirect job creation in the United States.
How big is the global financial services industry? ›
According to the latest projection from the Global Market Model in December 2022, the global financial services market achieved a valuation of $25,990.6 billion in 2022, constituting a substantial 26% of the overall global Gross Domestic Product (GDP).
How much money is in the global financial system? ›
In 2022, the assets of financial institutions worldwide amounted to 461.2 trillion U.S. dollars, a small decrease compared to the previous year.
What is global financial services? ›
Global Financial Services provides financial services. The Company offers loan programs, equipment leasing and financing, debt restructuring, real estate, and investment analysis services.
How much is the US financial sector worth? ›
Banking, Finance & Insurance in the U.S. 2022 - Industry Insights & Data Analysis. With the largest financial market in the world, the U.S. is setting trends and profiting from today's strong global economy. In 2022, the estimated revenue of the industry was US$4962 billion.
What percent of US economy jobs are in the service sector? ›
The statistic shows the distribution of the workforce across economic sectors in the United States from 2011 to 2021. In 2021, 1.66 percent of the workforce in the US was employed in agriculture, 19.18 percent in industry and 79.15 percent in services.
What is the size of the global fintech market? ›
The global fintech market was valued at USD 294.74 billion in 2023. The market is projected to be worth USD 340.10 billion in 2024 and reach USD 1,152.06 billion by 2032, exhibiting a CAGR of 16.5% during the forecast period (2024-2032).
What is the financial services industry breakdown? ›
There are three general types of financial services: personal, consumer, and corporate. These three categories encompass the major players and influencers for companies and organizations trying to climb the ladder of the industry.
Which country has the largest financial sector? ›
In 2022, China had the largest banking sector, with financial assets worth more than 47 trillion U.S. dollars.
World GDP - What is the world worth? Worldwide, $88 trillion worth of goods and services is produced a year. That's equivalent to $2.8 million every second. Gross domestic product (GDP) is the sum of consumption, investment, government spending and net exports in a country.
How much money does the world economy have? ›
Visualizing the $100 Trillion Global Economy in One Chart
We've covered this topic in the past when the world's GDP was $88 trillion (2020) and then $94 trillion (2021), and now according to the latest projections, the IMF expects the global economy to reach nearly $104 trillion in nominal value by the end of 2022.
How much money is in the financial markets? ›
Measuring Money and Markets in 2022
| Asset category | Value | Source |
|---|
| Narrow Money Supply | $49.0 trillion | Trading Economics |
| Broad Money Supply | $82.7 trillion | Trading Economics |
| Global Equities | $95.9 trillion | WFE |
| Global Debt | $300.1 trillion | IIF |
17 more rowsNov 28, 2022
Largest financial service companies by market cap
| # | Name | 1d |
|---|
| 1 | JPMorgan Chase 1JPM | 4.50% |
| 2 | Visa 2V | 0.56% |
| 3 | Mastercard 3MA | 0.13% |
| 4 | Bank of America 4BAC | 1.20% |
57 more rowsThe largest five banks by market capitalization are JP Morgan & Chase, Bank of America, Industrial and Commercial Bank of China, Wells Fargo, and China Construction Bank. The sixth through eighth largest banks, while smaller in market cap than the top five, are still significantly large.
What is the global financial Centre of the world? ›
The top global financial cities are New York City, London, Singapore, Hong Kong, and San Francisco, as determined by the GFCI 34 rankings. Other important financial centers around the world include Shanghai, Frankfurt, Zurich, Tokyo, and Chicago.
How large is the financial services industry in the US? ›
The market size, measured by revenue, of the Finance and Insurance industry was $6.0tr in 2023. What was the growth rate of the Finance and Insurance industry in the US in 2023? The market size of the Finance and Insurance industry increased 0.2% in 2023.
What percent of the US is financially stable? ›
The 73 percent of adults doing at least okay financially in 2022 was down 5 percentage points from 2021 and was among the lowest observed since 2016 (figure 1). As further evidence of declining financial well-being in 2022, the share of adults who said they were living comfortably fell 5 percentage points.
What is the largest industry in the world? ›
Biggest industries in the world
- Technology and information technology (it) Undoubtedly, the technology sector continues to dominate the global landscape. ...
- Healthcare and pharmaceuticals. ...
- Automotive. ...
- Energy. ...
- Retail and e-commerce.
Together, the New York Stock Exchange (NYSE) and the NASDAQ comprise the deepest financial market in the world, with a market cap of over US$50 trillion.
