How is Islamic finance different?

No interest practices.

Islamic finance is a financial system that operates according to Islamic law (which is called sharia) and is, therefore, sharia-compliant.
Based on the core concepts of Islamic economics, Islamic finance institutions adhere to certain principles that distinguish them from conventional finance:  Prohibiting interest (riba)  Steering clear of uncertainty-based transactions (gharar)  Avoiding gambling (maysir or qimar)  Avoiding investment in prohibited industries

It is a good question. It need a long easy to answer it. Shortly, the main difference between the Islamic and conventional is based on contract. Islamic finance contracts can be a sale, partnership, agency... etc but NOT at all a lending/borrowing contract. In addition, the Islamic finance contract should be free from several things. These include RIBA, Gharar (uncertainty, huge risk), Mayser (gambling).

Islamic Finance is based on the Shariah principles which promote equitable distribution of wealth by eliminating the perils of Riba (interest) and Gharar (uncertainty) and promoting Partnership based modes of function.

In islamic banking money is not sold or purchased while in conventional banking money is traded. In islamic bank whatever you need like plant, machinery or anything, that will be purchased by the bank in its own name and then sold to the customer , adding some amount of profit/margin by the bank. In short in islamict banking the customer get things(what ever the customer needs) from bank and not money. 

The main principles of Islamic Finance include:

• The prohibition or taking or receiving interest at exorbitant rates (Riba), but this does not preclude a rate of return on investment which is agreed up front by both parties contracting. In most cases, the references to interest rates by Islamic financial institutions are to help benchmark the return on investment to offer transparency. This does not imply interest is being used in the transaction.
• Risk in any transaction must be shared between at least two parties so that the provider of capital and the entrepreneur share the business risk in return for a share in profit.
• The prohibition of speculative behaviour (Gharar), meaning that gambling (Maysir) and extreme uncertainty or risk is prohibited and thus contractual obligations and disclosure of information are a sacred duty.
• Investments that violate the rules of Shariah, advised against by Shariah boards, and are generally non-ethical meaning that investment in businesses related to alcohol, pork related products, conventional financial services, entertainment (gambling and casinos, pornography, weapons and defense. An example of index restriction can be seen on Page5 of the Dow Jones Islamic Market Index Rulebook. http://www.ifec.org.uk/

If I try to define Islamic banking or Islamic Financing in a conclusive way (not subjective way) then it would be.....A banking system or financing system where money is not a trading commodity........
in conventional banking system money itself is traded and profit is termed as interest which is not allowed as per tenants of Islam whereas in Islamic banking / system goods are traded with the money and profit is shared among the stakeholders.....Money is a medium of exchange with goods, itself it should not be traded.....