This is a question John Kay asks in his recent Google Talk, answering with four things he thinks it should be for e.g.
- Payment system
- Wealth management
- Risk mitigation
- Capital allocation
An ironic point he makes is that the current structure and incentives in the financial system is such that far from mitigating risk, it massively increases it. A depressing thought is that it will take the next crisis for us to move to properly fix the system.
This 40-odd minute talk is worth your time :