Finance vs Banking: Difference Between Finance and Banking

Finance & Banking

Finance vs banking: the primary difference is that banking is a specific finance subject. While banking focus on managing loan, deposit, financial service, and product finance, it encompasses a broad range of activities related to managing investment and money.

Finance vs banking have the same motto: help firms and individuals manage their wealth, get significant returns, and lower shocks and risk.

But finance vs banking differs in they provide this security.

Banking help manage day-to-day transactions like term deposit, accepting demand, and offering loans, and is regulated only by RBI.

Financial services include a broader range of pensions, insurance, stocks, venture capital, financial research, hedge funds, mutual funds, and more.

Hence, financial services are not regulated not only by RBI but also by other financial market regulators like PFRDA, SEBI, and IRDAI.

The main distinguishing finance vs banking factor is banking accepts deposits while financial services do not.

Embedded finance vs banking as a service

Embedded finance & banking as a service both streamline in new ways that enable businesses to improve the user experience of their service and products.

Embedded banking and finance as a service both enable a nonfinancial service provider to offer their products and financial services. There are essential differences between the two that organizations must understand before deciding which approach is best for integrating financial services into the business and product process.

Read also: What Qualifications Needed for Public Finance Investment Banking Job

What are the Differences between Finance vs Banking

What is Finance?

Finance is a comprehensive term for managing, creating, and studying money, investments, and other financial instruments. It involves managing money and other assets, such as bonds, stocks, and real estate, to maximize returns and minimize risks. Finance is a critical function in both personal and business settings, and it plays a crucial role in economic growth and development.

What is Banking?

Banking is the business that protects and safeguards money for others. Financial institutions, like banks, gather deposits and lend these to those in need, acting as intermediaries.

The primary role of banking is to serve as an intermediary between savers and borrowers by taking deposits from individuals and institutions and then lending these funds to others who need them.

Banks also offer various other services, such as investment advice, insurance, and wealth management, to their customers. The banking industry is highly regulated and plays a crucial role in the economy, facilitating the flow of money and credit to businesses and individuals.

In a nutshell, finance vs banking are

Although finance and banking are related to money, they have many differences. So, the difference between finance and banking is given below-

Finance is the collection of money and the management and control of overall economic activities, including selecting sources of money, determining financial policy, capital market, investment of money, and analysis of various projects. On the other hand, banking is the collection of people’s money as deposits and the provision of facilities to withdraw it on demand or at any other time.
Finance generally means financing and raising money. On the other hand, banking manages all the bank’s activities.
Financing is a decision-making process. On the other hand, banking is the method of managing all bank activities.
Finance is the managerial art of collecting money and using the money collected. On the other hand, efficient operation is the main objective of banking.
Finance companies offer more services than banking institutions, including wealth management, insurance, financial research, etc. On the other hand, institutions in the banking industry are subject to much more stringent regulations than financial services firms.
Services provided by banking and non-banking financial institutions help their investors manage their wealth, which allows them to obtain better returns.
Financial services offer a large range of products and services that banks provide, such as asset management services, financial research facilities, insurance and pension services, etc.
Stringent laws, rules, and requirements that the Finance industry highly regulate the banking industry.
Banks can obtain deposits, and Financial can’t.

Final word

Finally, finance and banking also differ. Banking focused on customer service, compliance, and risk management. In contrast, finance focuses on financial analysis, corporate finance, and investment management. Understanding the difference between finance and banking is important for businesses and individuals to make informed financial pursuits and decisions.