Bank financial institutions are nothing new today, and the average adult category of at least 17 years old already has banking facilities and access. Suitable for personal, school, work, and so on.
Especially the productive age when most people have a job or business. Of course, you will create a particular account, and banking is a basic need at this time.
In addition to saving money and getting various facilities, banking is also a place to get financial assistance. However, it is not only the category of banks that provides financial facilities; other institutions are included in the non-bank category.
What is a Bank Financial Institution?
Bank financial institutions are providers of financial services that are very familiar to the people of Indonesia. Banks provide various services, such as making cash deposits through machines and visiting branch offices.
You can also make transfers between accounts, domestic and foreign, exchange foreign exchange, and pay bills.
Bank financial institutions also provide savings and investment services. You can have protection in the form of time deposits, foreign currency savings, gold, and investments. Because currently, banks also serve to purchase retail shares, ORI, and so on.
Benefits are obtained for both parties. You, as a customer, benefit from giving interest, which is calculated based on the savings held within a certain period.
Then the bank’s financial institutions benefit from the difference in loan interest paid by customers. Banks have other business branches for managing funds, such as payment, debit, and credit.
Differences between Bank and Non-Bank Financial Institutions and Examples
Although the business lines are similar, providing services in the financial sector to consumer banks and non-bank institutions is different. Here are some points of difference:
- Bank financial institutions collect funds directly through savings, current accounts, and time deposits or indirectly. Meanwhile, non-bank financial institutions only collect funds indirectly.
- Banking has the authority to print demand deposits (Bank Indonesia) and can influence the amount of money in circulation in society. At the same time, non-banks cannot do this because they do not have the authority.
- The primary purpose of depositing customer money with the bank is for interest income, security, and convenience. At the same time, deposits to non-bank financial institutions aim to get additional income, investments, purchases, etc.
Bank and non-bank financial institutions positively contribute to the economy, and these two categories can be used as alternative solutions when you experience financial problems.
The following are examples of bank financial institutions in Indonesia:
- Central Bank
It has the primary function of printing money, setting interest rates, ensuring financial stability, and setting monetary policy. Managed directly by the government and generally do not serve public transactions.
- Commercial Banks
Its primary function is as a financial intermediary that operates conventionally or in sharia. Serve general transactions, collect funds and then distribute them to individuals and companies that need them in the form of loans.
Some of the management involves the government, but mainly the private sector. For example, BCA, Mandiri, BNI, BRI, BTN Syariah, BSI, Muamalat, and so on.
While examples of non-bank financial institutions include cooperatives, stock exchanges, leasing, insurance companies, and pension funds, which explains bank financial institutions in Indonesia, have you understood enough?
Skha is a management consulting firm in Jakarta that has been active for 21 years. Skha’s services cover various industries, including bank financial institutions.
Also Read: Definition and Examples of Non-Bank Financial Institutions in Indonesia
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