The function of the financial system is to convert savings into investment, ensure the effective allocation of social resources. Financial intermediaries focus on overcoming information and communication problems that hinder the effective allocation of resources.

In order to solve the information problem, financial intermediaries replace investors to screen and monitor venture capital. Banks promise to use their financial capital to take risks in the game. Other financial intermediaries, such as rating agencies, use reputation to achieve similar promises. Securities underwriters use reputation and financial risks to ensure the quality of customer due diligence. In addition, financial intermediaries tend to have frequent and repetitive interactions with customers to facilitate the collection, processing, use of customer information, and to improve the efficiency of monitoring.

In order to solve communication problems, financial intermediaries establish product distribution channels and maintain customer relationships. The bank uses its branch network to act as the "first point of contact" for customers' financial services. Other financial intermediaries, such as brokers and exchanges, specialize in communication and matching stakeholders. The role of communication in financial intermediation has received less attention in historical literature. The role of communication in determining the structure of the financial industry has been growing and may now exceed the role of information.