Root detection by server or app

Many banks and video streaming services don't allow root on Android devices. My question is 1. Is it the app itself that detects root and refuses to work at some stage (for example by refusing to call the associated internet service)? 2. Is it the internet service that somehow directly or indirectly probes your device to see if it is rooted and if so instructs the app to disconnect or display some error message? I guess this might interest people for which the app _Hide Root_ doesn't work with some service providers.