Financial Institutions (2024)

A lending program begins with a financial institution that procures the funds it lends from a number of other sources.

Types of financial institutions include:

  • Banks
  • Credit unions
  • Community development financial institutions
  • Utilities
  • Government lenders
  • Specialized lenders.


These can be large national banks (Wells Fargo or Bank of America), regional or super-regional banks (U.S. Bank or Fifth Third Bank), or banks that operate in a geographically defined area (the National Bank of Arizona or the Bank of Colorado). The latter tends to be more closely entwined with their communities than the larger banks. For that reason, geographically defined banks may be the most attractive to state and local governments, despite the fact that those banks lack the broad reach and large number of branches (convenient access for home and business owners) of the large national or super-regional banks.

Any bank that focuses heavily on mortgage lending will be accustomed to closing loans that are well above $100,000, which they, in turn, sell to a secondary market investor. Banks are also familiar with home equity loans and home equity lines of credit through which consumers borrow money and the banks place a lien as security on the homeowner's primary residence. Those large, secured mortgage loans are quite different from the small consumer-oriented unsecured loans that in many cases support energy efficiency retrofits in homes. The bank departments that are most likely to be comfortable with unsecured residential clean energy lending programs are the consumer finance departments that work with unsecured lending. One national bank, EnerBank, now specializes in clean energy loans for consumers.

Larger loans that might rely on home mortgage refinancing, home equity loans, or energy efficient mortgages are typically housed in a separate department dealing with home mortgages. Commercial lending, on the other hand, often falls into a different department altogether. Not all banks that make home mortgages or do consumer financing also do commercial lending. Learn more about financing program market segments.

Credit Unions

Credit unions are nonprofit organizations with a charter to serve the financial needs of specific parts of a community, whether it is an employer group, a group of graduates of a particular university, or some other defined group of people. Examples include the State Employees Federal Credit Union in New York or the Navy Federal Credit Union. Like the community banks mentioned above, credit unions tend to be highly community focused, but in some cases they lack the broad geographic reach of a large national or super-regional bank. Credit unions typically focus on lending as a way to support the community or members for which they operate. Many credit unions already do small consumer lending—used car loans offered through used car dealers, for example. Credit unions are often very well-suited candidates for clean energy lending with which state and local governments should seriously consider developing partnerships.

Community Development Financial Institutions

Community development financial institutions (CDFIs) are nonprofit financial institutions that aggregate lending capital from a mix of federal or state government, foundation, and private capital sources and relend that money to targeted groups. Some CDFIs target their lending to small businesses, others target lending to nonprofit institutions, and a very small number of CDFIs target lending to the residential single-family sector. These financial institutions typically operate small offices with only a few staff and tend to make loans (usually larger than $100,000) to organizations that cannot secure lending from banks or credit unions. CDFIs can be ideal partners for state and local governments because of their community-based missions. Governments should bear in mind that CDFIs tend to be both capital and capacity constrained; the capacity constraints often mean that they do not have the staff to process the large numbers of small loans that are common in the single-family residential sector.


Utilities can be financial institutions, but are often reluctant to serve in that role. Their reluctance stems from three concerns: (1) legal and regulatory requirements related to serving as a lender, (2) the cost of developing computer systems to handle principal and interest payments and collections, and (3) any financial liability they may incur as a result of making and holding loans. Some utilities do, nonetheless, offer clean energy lending programs, primarily serving commercial borrowers. Learn more about financing program market segments.

Government Financial Institutions

Government financial institutions can include state energy offices, state-chartered finance authorities, or their local government equivalent. Many of the first generation clean energy lending programs from the late 1980s and early 1990s began with government financial institutions. As a rule, most government financial institutions are capacity constrained in the same way as CDFIs and have limited ability or desire to originate and service loans—particularly small residential loans.

Specialized Financial Institutions

A number of specialized financial institutions operate in the clean energy lending space. These nonbank finance companies have access to capital from a variety of sources. Examples include the three Fannie Mae-qualified clean energy loan program financial institutions (AFC First, Viewtech, and Energy Finance Solutions) and the Electric & Gas Industries Association.

Review the roles ofPartners and Stakeholders of financial institutions in more detail.

Financial Institutions (2024)


Financial Institutions? ›

The major categories of financial institutions are central banks, retail and commercial banks, internet banks, credit unions, savings and loan (S&L) associations, investment banks and companies, brokerage firms, insurance companies, and mortgage companies.

What are the 5 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 is the difference between a bank and a financial institution? ›

Banks are financial institutions that are licensed to provide loan products and receive deposits; non-banking institutions cannot do this. Financial services include insurance, the facilitation of payments, wealth management, and retirement planning.

What are three common financial institutions? ›

There are three major types of depository institutions in the United States. They are commercial banks, thrifts (which include savings and loan associations and savings banks) and credit unions.

What are the top 4 financial institutions? ›

The “big four banks” in the United States are JPMorgan Chase, Bank of America, Wells Fargo, and Citibank. These banks are not only the largest in the United States, but also rank among the top banks worldwide by market capitalization, with JPMorgan Chase being the most valuable bank in the world.

What are the 4 types of financial institutions? ›

The most common types of financial institutions include banks, credit unions, insurance companies, and investment companies. These entities offer various products and services for individual and commercial clients, such as deposits, loans, investments, and currency exchange.

What are the six types of financial institutions? ›

The 6 Types of Major Financial Institution in North America
  • Retail and commercial banks. Banks are undoubtedly the most recognized and familiar financial institutions. ...
  • Credit unions. ...
  • Investment companies. ...
  • Savings banks. ...
  • Internet or online banks. ...
  • Government-backed banks.
Mar 24, 2023

What is the most common financial institution? ›

Banks are the most common financial institution because they offer the most financial services. Checking accounts, savings accounts, home loans (mortgages), car loans, student loans, investment advice, ATMs, direct deposit and foreign currency swaps are just some of the many services banks offer.

What is a financial institution that is not a bank? ›

Examples of nonbank financial institutions include insurance firms, venture capitalists, currency exchanges, some microloan organizations, and pawn shops. These non-bank financial institutions provide services that are not necessarily suited to banks, serve as competition to banks, and specialize in sectors or groups.

Is your financial institution your bank? ›

Financial Institution - A "financial institution" includes any person doing business in one or more of the following capacities: (1) bank (except bank credit card systems);

Does financial institution mean your bank? ›

Financial institutions therefore encompass banks, trust or insurance companies, credit unions, finance companies, securities firms, leasing companies, etc. In that sense, financial institutions constitute a major component of the financial services sector.

Is Wells Fargo a financial institution? ›

It is a systemically important financial institution according to the Financial Stability Board, and is considered one of the "Big Four Banks" in the United States, alongside JPMorgan Chase, Bank of America, and Citigroup. Wells Fargo Bank, N.A.

Is Chase bank a financial institution? ›

JPMorgan Chase & Co. is one of the world's oldest, largest and best-known financial institutions.

What is a large financial institution? ›

Large financial institutions include U.S. firms with assets of $100 billion or more and foreign banking organizations with combined U.S. assets of $100 billion or more.

What are the five types of financial institutions and describe their main functions? ›

These organizations are called financial institutions. They include banks, credit unions, insurance companies, and brokerage firms. Financial institutions play a big role in our lives, helping us do things like save for college, buy a car, or even start a business.

Who is the number 1 bank in America? ›

1. JPMorgan Chase. JPMorgan Chase, or Chase Bank, is the biggest bank in America with nearly $3.4 trillion in assets. It boasts a vast network of over 4,800 physical branches and more than 15,000 ATMs.

What are the financial institutions in the US? ›

The 10 largest banks in the U.S. are Chase, Bank of America, Wells Fargo, Citibank, U.S. Bank, PNC Bank, Goldman Sachs Bank, Truist Bank, Capital One and TD Bank.

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