Prime brokers are typically investment banks which are able to sell clients, often hedge funds, a 'one-stop shop' service.
These clients expect the banks to handle trades in securities that may be complex, illiquid and denominated in multiple currencies, quickly find counterparties that can lend stock so a hedge fund can 'sell short', manage 'margin' requirements for complex derivatives positions (handling the calculations and notifying the fund when more collateral is required) and assist with the regulatory reporting and accounting requirements that arise on a large, diverse portfolio.
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