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What is the most important function of financial institutions? It’s a transferring of money through the economy. Comparing a state with a human body, financial institutions are like veins, and finances are like blood that moves through them.
Financial institutions are intermediaries of financial markets. The effective functioning of any state is impossible without these intermediaries.
Commercial banks
A commercial bank is a financial institution that “accepts deposits, makes business loans, and offers related services. These institutions are run to make a profit and owned by a group of individuals, yet some may be members of the Federal Reserve System.” (Tallman, 2003)
Possible market for commercial banks includes individuals (mostly involved in deposits) and businesses (that is interested in lending). As a client of commercial bank you can choose any kind of deposit account, for instance, checking, savings, or time deposit.
Insurance organizations
An insurance organization is an organization that provides “insurance policies to the public, either by selling directly to an individual or through another sources such as an employee’s benefit plan.” This kind of financial organization consists of multiple agents.
I presume that the market for insurance organizations includes both individuals and companies. It actually depends on the kind of insurance organization, if it deals with “life insurance, health insurance, or auto insurance, or offer multiple types of insurance.” (Tallman, 2003)

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Investment banks
Investment bank is an organization that invests “large amounts of long-term fixed capital, primarily into established firms.” (Tallman, 2003)
Therefore, I can conclude that the market for investment banks mostly consists of corporate clients (investors).
The main difference of investment banks from commercial banks in that they do not usually work with individuals. (It means no cash deposits and no traditional loans to individuals). On the contrary to commercial banks, investment banks often use non-traditional investing practices in order to obtain higher profit.
Pension funds
“Pension funds are sponsored by non-financial companies, which collect and invest funds on a pooled basis for eventual payment to members in the form of pensions, are among the most important institutions in certain national financial markets.” (Davis, 1997)
The major difference of pension funds and commercial banks is that there is no premature withdrawal of funds because of long-term liabilities. It means that pension funds suffer little liquidity risk and this characteristic gives pension funds into a stable position.
The major possible risks for the pension funds are: unexpected changes in salaries, non-standard transfer payments, and legal changes, such as change in retirement ages.
These financial institutions concentrate on long-term assets that help to obtain the highest returns. The risk is compensated by the” pooling across assets” approach. (Davis, 1997)
The market for pension funds includes employees and individuals.
Interactions between financial institutions
All mentioned financial institutions are financial intermediaries. The major interaction is data transferring to affiliates and partners in order to fulfill cross-marketing activities. Modern information technology increases efficiency of sharing the consumer data.
Another kind of I interaction is “channeling of funds between lenders and borrowers indirectly. Savers (lenders) give funds to an intermediary institution (such as a bank), and that institution gives those funds to spenders (borrowers).” (Tallman, 2003)
To sum up, financial institutions play an important role of intermediaries economic agents who want to lend with economic agents with a shortage of funds.

References
Tallman, D. (2003). Financial Institutions and the Safe Harbor Agreement: Securing Cross-Border Financial Data Flows, Law and Policy in International Business, 34 (3): 747
Davis P. (1997), Pension Funds: Retirement-Income Security and Capital Markets an International Perspective, Clarendon Press, Oxford: 5.