A financial intermediary is an institution or individual that serves as a middleman among diverse parties in order to facilitate financial transactions. Financial intermediaries are meant to bring together those economic agents with surplus funds who want to lend (invest) to those with a shortage of funds who want to borrow. In doing this, they offer the benefits of maturity and risk transformation. Common types of financial intermediaries include commercial banks, investment banks, stockbrokers, pooled investment funds, mutual funds, pension funds, and insurance companies.

Financial intermediaries offer a number of benefits to the average consumer, including safety, liquidity, and economies of scale involved in banking and asset management. They move funds from parties with excess capital to parties needing funds, creating efficient markets and lowering the cost of conducting business. Financial intermediaries also provide the benefit of reducing costs on several fronts. They provide a platform where individuals with surplus cash can spread their risk by lending to several people rather than to only one individual.

In addition to traditional financial intermediaries, there are also non-bank financial intermediaries that do not accept deposits from the general public. These intermediaries may provide factoring, leasing, insurance plans, or other financial services.

Financial intermediaries play an important role in the overall economic stability of a country and the growth of the financial services industry.