In order to fully understand the differences between banks and other financial institutions, let us first discuss the meaning of financial institution. You can think of this term as an umbrella encompassing many businesses and organizations, including banks. In general, financial institutions can be divided into two groups: non-banking financial institutions and banking financial institutions. The first group consists of various institutions, including leasing companies, investment banks, finance firms and insurance companies. Banking financial institutions, on the other hand, include banks whose main purpose is to make loans and accept deposits. We can take a closer look at both of the categories.

Banking financial institutions
Banks, more precisely – retail or commercial banks, fall under the category of banking financial institutions. A bank is a financial intermediary with a purpose to act as a middleman between suppliers of funds or depositors and borrowers. The main task of a bank is to accept deposits and use these funds later on to offer loans to its customers. Another duty of a bank is to act as a payment agent, which is done by offering a host of payment services, such as credit and debit cards, direct deposit facilities, cheques and bank drafts. A bank makes money by investing the deposits in financial securities and assets, but mostly by lending the funds further to its customers. The primary reasons for depositing money in banks are convenience, safety and interest income.

Non-banking financial institutions
The other type of financial institutions includes investment banks, insurance companies, investment funds and other. A range of financial services offered by non-banking financial institutions differ from those of a bank. The main difference between both is that non-banking financial institutions cannot accept deposits into savings and demand deposit accounts, while it is one of the core businesses for banking financial institutions.

Meanwhile, they offer a variety of other services. For example, investment banks offer services to their clients such as underwriting of debt and share issues, corporate advisory, securities trading and derivative transactions and other investment services. Insurance companies offer a protection against specific losses in exchange for an insurance premium. Pension and mutual funds are savings institutions where investors are able to invest their funds in collective investment vehicles. There are financial services that are provided by both banking and non-banking financial institutions, such as granting loans, financial consultancy, leasing of equipment and investment in financial securities.

Examples of non-banking financial institutions
Breder Suasso is a non-banking financial institution, which core business includes providing its clients with swift and secure cross-border payments by opening a multi-currency account (for which a face-to-face meeting is not required). Other services include internationally accepted debit card and financial advisory for both corporate and private clients. The company's main selling points are confidentiality, security and convenience of cross-border payments.

PaySera is a Lithuanian-based non-banking financial institution offering a free-of-charge multi-currency account and a possibility to transfer funds to more than 10,000 banks in over 180 countries around the globe in less than 30 minutes. Additionally, the company in cooperation with more than 5000 e-shops offer a Paysera Checkout payment method for a faster transfer and a chargeback of up to 1% of the money spent. Company's main selling points are fast and accessible e-environment, around the clock service and highest level security.