6 Types of Major Financial Institutions in North America (2024)

With a wide range of financial institutions (FIs) available to businesses, choosing the right one to manage your finances can be overwhelming.

Determining the right banking partner can have a significant impact on your business' success, and there’s no one-size-fits-all solution when it comes to financial institutions. Businesses must consider various factors, such as the level of service, account fees, transaction processing times, and interest rates ― to name but a few.

In North America, there is a diverse range of financial institutions, from traditional banks to credit unions, savings banks, government-backed banks, and more. Research by Plaid indicates that there are a staggering 11,652 FDIC and NCUA-insured financial institutions in the United States alone. Additionally, Canada has another 357 federally-regulated financial institutions, as highlighted in a report by OSFI.

Each FI has its own set of unique features, advantages, and potential disadvantages. In this article, we provide an overview of these different types of financial institutions to help business leaders make informed decisions about which banking partner will best serve their needs.

1. Retail and commercial banks

Banks are undoubtedly the most recognized and familiar financial institutions.

They offer numerous services to customers, including checking and savings accounts, loans, credit cards, and investment services. Banks are federally regulated, which ensures that they operate in a safe and compliant manner. And most banks protect customer deposits through government-backed FDIC insurance in the United States, or CDIC insurance in Canada.

Unlike central banks (which do not work directly with the public), retail and commercial banks primarily offer traditional banking services. Retail and commercial banks also offer digital banking services that allow businesses to manage their accounts online.

Generally, banks tend to charge higher fees than other types of financial institutions, due to the high overhead costs associated with physical branches and staff members. Additionally, businesses must often meet strict, specific requirements before they qualify for certain services, such as loans or lines of credit.

The largest retail and commercial banks in North America
  1. JPMorgan Chase
  2. Bank of America
  3. Citigroup
  4. Wells Fargo
  5. Royal Bank of Canada

2. Credit unions

Another popular FI option among business owners are credit unions. Credit unions typically have lower fees than banks, since they don’t require physical buildings or staff at the same scale as larger banking operations.

Credit unions also focus on niche industries and local geographies, and are committed to community growth. However, one potential downside is that credit unions typically require customers to become members by paying a nominal fee and meeting eligibility requirements before they can use their products and services.

The largest credit unions in North America
  1. Navy Federal
  2. State Employees’
  3. Pentagon Federal
  4. Boeing Employees'
  5. Vancity

3. Investment companies

If you’re an established business looking to expand your investment portfolio, an investment company may be the right fit for you.

Investment companies aren’t exactly viewed as traditional banking options. But while they don’t offer the same services as other FIs (such as checking accounts or convenient debit card access), they can provide great opportunities for those looking for investment advice or seeking growth capital through equity investments from external sources.

Investment companies work best for businesses who have already established themselves financially, but are looking for ways to expand their wealth portfolios even further by investing in stocks, bonds, mutual funds, or structured investments like ETFs (exchange-traded funds).

The largest investment companies in North America
  1. BlackRock
  2. The Vanguard Group
  3. UBS Group
  4. Fidelity
  5. State Street Global Advisors

4. Savings banks

Savings banks are financial institutions that offer a range of services, including checking and savings accounts, loans, and investment programs.

For business owners, savings banks can be an attractive choice, because of their focus on building relationships and providing personalized service to clients. They’re often small or mid-size institutions and can provide more flexibility than larger banks.

A potential downside of savings banks, however, is that they have more limited resources and fewer technological capabilities than larger banks, which can make certain transactions or processes more challenging.

The top savings banks in North America
  1. Popular Direct
  2. My Banking Direct
  3. North American Savings Bank
  4. BrioDirect
  5. Ivy Bank

5. Internet or online banks

Without the use of physical branches and locations, internet banks or online banks are financial institutions that operate entirely online. For business owners, internet banks offer advantages such as lower fees, higher interest rates on savings and checking accounts, and convenient online services.

Online banks typically provide 24/7 account access and mobile banking apps, too ― making it easy for business owners to manage their finances on the go. However, a potential downside of internet banks is that they lack the personal touch and face-to-face interaction offered by brick-and-mortar FIs. Additionally, online banks may not offer as extensive a range of banking services as traditional banks, such as small business loans.

The top online banks in North America
  1. Quontic Bank
  2. Discover Bank
  3. Axos Bank
  4. Ally Bank
  5. NBKC Bank

6. Government-backed banks

Government-backed banks in North America are financial institutions that are owned by the government, or partially owned with government support.

Government-backed banks can be an attractive choice for business owners as they often offer loans at lower interest rates than private banks. Additionally, government-backed banks can provide more flexible repayment terms, have a greater tolerance for risk, and offer advisory services for clients. For example, the Business Development Bank of Canada (BDC) has consultants who can help clients in areas such as business strategy, operational efficiency, sales and marketing, and more.

However, government-backed banks are sometimes subject to political influence or constraints, which may lead to changes in lending policies or practices.

Government-backed banks are far more common in Canada than the United States.

Government-backed banks in North America
  1. Bank of Canada
  2. Business Development Bank of Canada
  3. Farm Credit Canada
  4. ATB Financial
  5. The Bank of North Dakota

The bottom line

Ultimately, all businesses will require some kind of banking partner ― whether big bank or small ― to meet their needs and effectively manage their finances. It’s important that business owners consider all factors to make an informed decision when selecting a business banking partner.

Concerned about recent bank failures? Learn how by watching our on-demand webinar Understanding Bank Failures to Protect Your Assets.

6 Types of Major Financial Institutions in North America (2024)


What are the 6 types of special financial institutions? ›

Types of financial institutions include:
  • Banks.
  • Credit unions.
  • Community development financial institutions.
  • Utilities.
  • Government lenders.
  • Specialized lenders.

What are the 7 major types of financial institutions? ›

Below are the 9 major types of financial institutions:
  • Insurance Companies. Insurance companies are businesses that offer protection against potential future losses. ...
  • Credit Unions. ...
  • Mortgage Companies. ...
  • Investment Banks. ...
  • Brokerage Firms. ...
  • Central Banks. ...
  • Internet Banks in the UK. ...
  • Savings and Loan Associations.

What are the six of the financial system? ›

The financial system can be broken down into six main parts: money, financial instruments, financial markets, financial institutions, regulatory agencies, and central banks.

What are the different types of financial institutions in the US? ›

They are commercial banks, thrifts (which include savings and loan associations and savings banks) and credit unions. These three types of institutions have become more like each other in recent decades, and their unique identities have become less distinct.

What are major financial institutions? ›

Explore All. The definition of a financial institution typically describes an establishment that completes and facilitates monetary transactions, such as loans, mortgages, and deposits. Financial institutions are a place where consumers can effectively manage earnings and develop financial footing.

How many financial institutions are there in the world? ›

There are 44,000 banks and credit unions around the world. While 28 of those banks have over $1 trillion dollars in assets serving audiences globally, the vast majority of these financial institutions are smaller organizations focusing on providing catered financial products to small communities.

How many types of financial are there? ›

The finance field includes three main subcategories: personal finance, corporate finance, and public (government) finance.

How many types of banks are there? ›

Classification of Banks in India

Commercial Banks can be further classified into public sector banks, private sector banks, foreign banks and Regional Rural Banks (RRB). On the other hand, cooperative banks are classified into urban and rural. Apart from these, a fairly new addition to the structure is a payments bank.

What are the top 4 financial institutions? ›

Biggest Banks in the U.S.
Rank by Asset SizeBank NameTotal Assets
1.Chase Bank$3.38 trillion
2.Bank of America$2.45 trillion
3.Wells Fargo$1.7 trillion
4.Citibank$1.68 trillion
6 more rows
5 days ago

What are the 3 major types of financial? ›

Finance can be divided broadly into three distinct categories: public finance, corporate finance, and personal finance. More recent subcategories of finance include social finance and behavioral finance.

Is Bank of America a financial institution? ›

Bank of America is one of the world's leading financial institutions, serving individuals, small- and middle-market businesses, large corporations, and governments with a full range of banking, investment management and other financial and risk management products and services.

What are the 6 steps in the financial process? ›

Financial Planning Process
  • 1) Identify your Financial Situation. ...
  • 2) Determine Financial Goals. ...
  • 3) Identify Alternatives for Investment. ...
  • 4) Evaluate Alternatives. ...
  • 5) Put Together a Financial Plan and Implement. ...
  • 6) Review, Re-evaluate and Monitor The Plan.

What are the 6 components of a successful financial plan for a business? ›

A business financial plan typically has six parts: sales forecasting, expense outlay, a statement of financial position, a cash flow projection, a break-even analysis and an operations plan. A good financial plan helps you manage cash flow and accounts for months when revenue might be lower than expected.

What are the different types of financial institutions and their functions? ›

Some of them are banks — for example, commercial banks and credit unions are types of financial institutions. Other institutions, like brokerage firms and mortgage loan companies, provide loans and investment services but do not engage in traditional banking services.

How many financial institutions are there in the US? ›

Select Report Filters
YearLocationsTotal Commercial Banks (Total Insured)
2021United States & Other Areas4,238
2020United States & Other Areas4,379
2019United States & Other Areas4,526
2018United States & Other Areas4,717
86 more rows

How many different financial institutions are there in the United States? ›

Research by Plaid indicates that there are a staggering 11,652 FDIC and NCUA-insured financial institutions in the United States alone. Additionally, Canada has another 357 federally-regulated financial institutions, as highlighted in a report by OSFI.

What is the difference between a bank and a financial institution? ›

Banks manage customers' deposits and facilitate transactions, while finance broadly encompasses the management of funds, whether for individuals, corporations, or governments. Credit and Loans: Both sectors provide loans and credit services.

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