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Financial institutions (banks) are responsible in handling financial issues, records, accounts and income of individuals, companies, churches and organizations. They respond promptly according to your demands on your accounts, they also have zero tolerance for fraud and are very security conscious, security intelligence and anti financial crime expertise but they've policies of not collecting dime from customers accounts yet banks are most wealthiest institutions on earth.

How do they make money?
* mortgage - using some billionaires account to buy housing properties and leasing them
* estate and lands with same patterns
* SMS alert charges
* Transfer charges
* Syphons dormant accounts or dead people accounts that are inactive with enough money in it.
* ATM and investment cards
* sales of currencies like dollar to naira
* preparation of international documents
* savings people's valuables like gold, certificate, court documents, WILLS, and so on.

This is what makes financial institutions very wealthy.

Bank is an establishment known for financial services but what they do these days is way more than that. And the things they do are both legal and illegal, still, they cover up under the guise of the legality that covers the sector.

Mind you, you forgot to add that;

1. They launder money.
2. They broker onshore and offshore deals (both legally and illegally).
3. They steal money from customers' accounts through double and unexplainable charges.
4. They blackmail their customers and steal the money of the faint in heart.
    And many more...

There is a lot that will always make me sceptical of banks.

Besides all what OP mentioned I hate it when they charge a high-interest rate if you take a loan and give you a very small interest if you deposit money, the same money that they are going to use to loan people, they have a charge on all your transaction even checking your balance, banks are a necessary evil, you cannot go around your business without a bank's help but with Cryptocurrency's adoption some of the things we need in a bank are now provided by Cryptocurrency and that is getting a good interest by holding Cryptocurrency.

Yeah, the transaction fees.

While we're aching from the transaction fees for Bitcoin, there goes the banks that have been charging a lot for the transfers that we do especially the overseas.

Also don't forget about the maintaining balance, we're obliged to reach that threshold and not to pass on that or else we'll be charged.

And another thing is that they're backed by the government so being wealthy and at the same time powerful is what they are.

You forgot one of the most important sources of revenue for banks which is interest from loans. Banks charge a certain percentage of interest for loans given to individuals and businesses. Banks also engage in business partnerships with individuals and companies. They can fund a project and the profit from such a venture will be shared between the parties involved. They can also serve as middlemen between investors which can make them earn commissions.

Banks also make money through buying and selling foreign exchange. During scarcity of foreign currencies, banks can make high profits from sales of these currencies to customers. Commission from service rendered is another source of income. Banks can get a commission for receiving payments on behalf of the government or other corporate organization

This one is really interesting, cause when i applied for a mortgage loan for my house many many years ago, i did read up on how banks give loans, and it's downright criminal.

If I (a private person) give you (another private person) a loan for a house that costs 300.000 euro's, i first have to have 300.000 in my account, then i transfer the money to you and you can buy a house using this money. Each month you'll have to give me a fixed percent (for simplicity's sake, let's say it's 5%)...
If you're going to pay back the loan in 30 years, 'ill make 279,767.35 in intrest over those 30 years... Pretty neat huh.... I'll almost double the amount i loaned out to you.

When a  bank gives you  a loan of 300.000 euro's, they don't have to have 300.000 on their books... They can just create "virtual money" which they loan out to you. IIRC, the percentage is actually a little less than 10%. So, a bank can have 30.000 on it's books, and still give out a 300.000 loan AND get 279.000 in intrest. They don't double their money, they actually multiply their investment by a factor >9...

It's downright criminal, but it's legal... This is why we need to be our own bank... If you don't own 300.000, you shouldn't be allowed to loan out 300.000.

The mortgages,  insurance scams and interest rates from loans are the main source of income for bank plus they charge fees for everything you do in bank so that's why they are rich and they know how to get money from customers .

It's just a way of the bank being able to take advantage of customers to get money and I think it can't be blamed either because every bank customer who saves money in the bank is based on his own agreement without any coercion from other parties. And if someone thinks about the bank being able to get rich with the savings of customers, it is his own fault in trusting the bank to keep his money there.

Because the customer only wants security for their money without thinking about the benefits that can be obtained by the bank itself. What do you think ? Is there an error in that case, if there is an error, where do you think the error came from?

Most of the bank's profits come from lending to customers.  Banks usually adopt several means of providing loans. If someone takes a loan in agriculture, their percentage is relatively low, or if someone takes a loan in business, the amount of interest is a little higher.

And they have some other means of earning profit, such as if a customer is given an ATM card, then they take some interest from that card annually. Some charges are also applicable for transferring money from one bank to another.  Current banking services have added various facilities with the bank to increase the profit of the bank. 
For example, various banks have now launched digital banking services through which various bills including electricity bills and telephone bills are being paid, from which the banks are receiving some interest from various companies. This is basically how the bank earns profit.

Seeing the title, I thought it would be a question but op is the one who provide the answer. It's pretty obvious tho. Also including the interest. That's why banks wants people to take loans so they can make money from their high interests. When the economy is declining, people don't usually take loans since they'd be saving money. So the banks will promote low interest loan just to make people acquire loans.

Those things mentioned by op are like their fee for the services they provide. Some charges may be low but if you'd compute the number of their customers paying that small charges, it'll be a big amount of money.

Any institution has money that can generate money in legal or illegal ways. Banks really generate money from loans. It is true that they have paid services, but without bank loans they will not continue to grow in this fast form or achieve coverage or provide cheap services like this. The government needs banks and commercial banks as it is the arteries that provide the economy with force, so dat has weakened the banking system whenever the state is very weak as the body where the arteries weaken.


Do banks in your country impose fees on SMS notifications? It is free in many countries and it is a service for the user to know how much his balance is not supposed to be imposed on fees.

Customer money in savings accounts or inactive accounts is not the money used by the bank, the central bank must impose more restrictions to not use customer money.

Burning is a leading financial service, also to this day, and is still a long -standing financial problem for both the community and government.
I agree with your points, but I want to question how the money laundering mechanism is carried out, because as far as I know, many types of banks including Bamk Center, Private Banks, Government Banks, Foreign Banks, Mixed Banks and others.
To my knowledge, the bank that can wash money is a bank center, what do you mean to say all types of banks can wash money?. If so, what is the mechanism?

It's actually simple when you store your money in your bank account, it's basically free* capital at their disposal.
*interest rate is basically negligible or very small for saving/checking accounts.

They simply lend it to other people with higher interest rates, or "game" with it on the capital market, etc. If they aren't stupid, they will make a profit since the costs + interest rate will be lower than the average returns using the "free" capital. Oh hey, when shit hits the fan, they have government to bail out their mistakes.

Well on the notes the banking system tells you they don't touch their customers money that was entrusted in their care but I don't think that's the case, bank can be a safe House for keeping your funds but banks are headed by top financial experts, economist, market analyst and business gurus that has years of experience under their belt.

I won't trust the words of any centralized system and that includes the banking system I strongly believe they tamper with individuals funds to push into businesses and investment for there own profits that's why banks uses  a means especially promos and giveaways to those who can leave their account untouched for a good duration.

The banking system is a establishment that keeps the customer stagnated with no income coming from their deposit but the bank themselves are funded with ready capital to engage in other investments.

Aren't these coefficients controlled by central banks?
Such money is called endogenous, but a bank cannot lend indefinitely because the ratio of bank loans to reserves is controlled by the central bank. And if the borrower does not pay, then the bank sells debts and reduces its reserves.

These elements can be summed up in three main ideas that represent the sources of returns for almost all types of banks around the world:
- Loan interests: It is considered one of the most important sources of income for the bank, but it does not exceed 30 percent of the total returns on average. These interests are subject to many controls determined by the Central Bank.
- Fees on services: It also represents an important percentage of the total returns and is imposed on all services provided by the bank, including loan study services, even if they will not grant it to you later. Returns on fees do not exceed 30 percent either.
- The largest percentage of revenues comes from various sources where determining the profit margin is open and not subject to supervision, for example contributing to major projects as a partner, providing insurance services, or investing in real estate.

OP, you don't need to bother telling us about the profits and income that the bank gets.

Worldwide or internationally, you tell us the Bank's income is inseparable from the two factors below.
How Do Banks Make Money? (https://www.fool.com/investing/stock-market/market-sectors/financials/bank-stocks/how-banks-make-money/)

Do not be surprised if companies that operate like banks are rich.

Banks generate huge income because they are favoured by the laws of the country. They can offer services we, as common citizens, aren't allowed to. An example of that is the lending business. Banks charge high interest rates from customers when they borrow money, however, we can't make profit that way, otherwise we are accused of being loan sharks, which is a forbidden activity on many realms. So banks have the monopoly, and when you have the monopoly of something it's much easier to profit, since there isn't competition...

I don’t think zero tolerance to fraud makes sense here? Fraud is something that is done by hackers or actual fraudsters. No matter how strong system we build bank accounts will get hacked by masters of it.

They have huge income, best of the best profits but yet no system can guarantee 100% security. If you consider bitcoin on the other hand the safety is unmatched.

Anyways the income is generated with mostly interest on our savings. Big loop hole of money circulation. That’s looting anyways.

You forgot the most important way in which they earn money, which is to use the money you have deposited on your bank account as their own and make some risky bets on the markets, after all they cannot lose, if they win then they can reap the profits, but if they lose then they can cry to the government in turn so they are rescued, this is what happened with the subprime mortgage crisis, however the difference now is I am not so sure the governments have the capabilities to save them even if they want to.

There is more to a bank's income; we only see the physical charges they are charging without knowing the other charges they make offline without the account owner's permission.

They have zero tolerance for fraud, while some of them go bankrupt due to poor policy because of its centralization.

More to this!
Banks do utilize customer money to make loans to customers and profit; they also use customer money to make personal investments for personal gain, which contradicts their policy because they only stated that they would protect customers' wealth and not use it for personal gain.

Traditionally, banks make money from interest in money that they lend to people and organisations, and charges on services rendered. But the way that banks are building modern structures as  branches everywhere, buying brand new cars for their marketers, paying attractive salaries to their staff and declaring large profits every year, makes you to wonder whether it is mainly from interests on money borrowed and the small charges on transactions that they make all this money from. Although I hear often about unconfirmed reports that they help corrupt politicians to keep and launder I'll gotten wealths. 

Having said all this, I still think that banks remain the safest place where you can keep your money. Because they never tell you that there is no money whenever you come to collect.

Sorry, but this is completely inaccurate! Simple real-world personal example from 2017:

I've sold my house to a guy who took a mortgage to buy the old apartment, the price was 140 000E, he took that loan, the bank wired me the money, the full 140 000E, and I spend it like the next day buying my new apartment in which I live now.
So, where are the virtual money and how did the bank manage to pay me the entire amount when they deal only with 10%?  :D

You forget that it's not the bank that's selling you this, the bank needs to pay the actual owner of the house that can go the next day out to Las Vegas and gamble and whore all the sum in a day, and the last time I checked neither casino nor brothels take virtual money!

As  a financial institution, they are the richest and wealthiest just as a poster has said but they are the worst of them all to loot you plane blank without any sniff from you and if you think of raising dust, they blackmail you and beat you to your own game if they look your source is not  a genuine one to go by.

OP i see you made mention of some ways these broad day light  crooks that calls themselves financial institutions loot and i think some points are missing to add up;

They roam about politicians  seeking for who would approve of them to be the current state government financial institution so that anything in the state coffers would be monitored by them and they end up playing smart with the politicians to loot from the state treasury.

I wonder what they do stamp on fiat transactions that they demand for duty stamp charges. This is very crazy as it is done in excess in my country.


Banks aid and cover up fraudulent transactions so as to get big rewards from the fraudsters and when the senior fraudsters(government and government agencies) comes after them they play two to tango, take their own share and walk away.


They really get illegal fees from all these transaction and cover up lots of untold and seen deals. They are just too criminal minded.

There are so many ways many of these banks generate income to themselves but we might not know because we don't carry out research or ask questions about how they are able to finance there business without quickly going bankruptcy. It is clear that many banks now are going bankruptcy but there major problem that led to that may be out of mismanagement.

Banking is also a business model and to be profitable in business they need tricks. You can't say they blackmail or steal customers' money. Just like when you sell to someone else, you buy $1 and sell $10, no one is saying you stole the customer's money. Because customers come to you by themselves, and so do all those, who need to use the bank. You voluntarily come and ask to use their services, they do not put a knife to your neck and force you to deposit money in the bank.

Bitcoin investors don't like banks, but there's no need to badmouth them too much as we are still using their services daily. How will you enter the market, and invest in bitcoin

Fractional reserve and central banking would be the most succinct answer, neither of which a person or normal business has access to.  They get the cheap money at many multiples of availability vs their actual real capital.   All they have to do is loan out that money to people who will likely return it with interest, if they are involved with houses they either get the house or the regular payment of interest in excess of the rate the bank itself pays.
    Its been a good business for years with 'cheap money' made available primarily and first and foremost to banks or other similar large finance institutions.   Somehow they still manage to over lend or borrow in markets which upset them but most of the time its a strong bias to them for profits with a gift of being related to the issuer of national currency its good game when you are friends with the dealer.

They actually need to have 300k in cash to you if someone needs to have their transaction in cash but if it is a transaction from an account to another account then all they need to do is just to type in that amount of money virtually. Yeah its borderline legal but thats how banks operate and they made money through that

This is a system that everyone have to live in and no one really question this system at all not until bitcoin was created to actually counter this all fiasco

Wasnt aware for banks to be that having that consideration on rescuings banks if ever they would go bankrupt? Im not really sure about that because Gov't wont really be that dumb on saving up an institution but

it wont be shocking if they would really be doing something on not to make it happen but its really hard to believe on that banks would really be lying into the floor and failed out. Its true that they do give that
peanut interest out of your deposits on yearly basis and lend them into others and putting and giving them huge interest which its an easy money for them.

If ever the said person who doesnt able to pay up his obligations then we do know that collateral would really be get and would be sold out later on which means its even more money.
Is there anything that we can do? There's none and this is why crypto space is really getting that attention because there are people who do really
hate banks basing up on the services and rip off that they do make.

One of the reasons why banks make money is that their clients' money, which is not their money or property, they lend to their other clients who also want to borrow, and they charge a lot of interest. Then the money entrusted to them, they will only grow very low and then there will be a lot of requirements before you can be approved for the loan you are applying for.

     The second thing I know is that they also put money in stocks, so that they have an interest profit here monthly that their clients don't know that they also grow a lot. So with this style of banking, I would rather spend my money in the business than put it and entrust it to all of them.

I've never heard of this, it's so absurd. I used to take out a bank loan to build my business, and I have never missed a dime on my loan.
People are comparing banking to bitcoin, and I want to know if anyone here needs money, needs capital to start a business, and does anyone get any help from bitcoin? I mean, are we going to get a loan from bitcoin?

Honestly, there's no need to compare banking and bitcoin anytime, anywhere, as both have different use cases. We are going to use banking for some purposes, bitcoins for some, they are completely different, so let's stop comparing them in this case.

Banks have large capital so they can easily turn money around for profitable things, almost all business units have relationships or credit with banks so that banks get income from the interest provided, for example banks get money from customers and banks give interest of around 8% per year, then the bank distributes credit and earns about 25% interest a year so that it gets a profit from the difference in interest.

It is accurate, you have misunderstood. mocacinno is saying that banks create that money out of thin air, not that the money created does not exist.

There are two forms of fiat money creation, the first is done by central banks and the second by commercial banks. When commercial banks lend money by creating it out of thin air with a lower reserve ratio, in some cases 2.5% or even 0%, they are creating money out of thin air even though the money they send you is real. You can spend it on buying a house or take it out in notes and count them one by one.

The point is that it is created because it is not based on a previously existing deposit (or a deposit of at most 10% of what you borrowed).

The system is sustained because people don't run to take money out of the banks - if only 10% did, there would be bankruptcies.

Of course, the more money they bring in, the more chances they will use their clients' money in their optional ways to make a profit.

The amount of interest they charge here is actually only for lending. Then the loans they make have collateral that if you don't pay, many collaterals end up being foreclosed and become the property of the bank, they don't have that many other sources.

^^ this ^^ explains it better :)

If my understanding of fractional reserve is correct, i might have explained it better....

I asked chatGPT for an ELI5 about fractional reserve banking in regards to the housing market, and this is what it came up with... To the best of my understanding, this is correct.
The bottom line is that, in this example, there was an initial deposit of $20.000 (for example, on somebody's saving account), and in the end the banks manage to lend out (and collect intrest on) $200.000 with only the $20.000 in the bank account to back up all those loans. The person with the saving account gets intrest on the $20.000 whilst all the borrowers have to pay the bank intrest on $200.000.

The financial system plays this off as a good thing: they create more money in circulation and the economy wins... What they forget to add is that they multiply their income by creating "virtual" money and if everybody would withdraw their money ($200.000 in total), in the end the bank would only have $20.000 "for real" whilst everybody in the system does have a grand total of $200.000 on their accounts.


source: https://chat.openai.com/

You are getting this all wrong buddy, perhaps I should break them down for you. Mind you, these are not the main benefits but the ill-additional points I want people to know about banks. And since the 1&2 are simple enough to understand, let me bother myself only with 3&4.

3. They steal money from customers' accounts through double and unexplainable charges: It's not new that money disappears from people's bank accounts. It has happened to me and many people around me. At times, they have an explanation for it as like double charges or mistakes, and at times they do not have any excuse for it and refund the money back. What if I didn't take it up, and what about those that will just overlook it? There is more to that, I just gave those little examples.

Another example was my bank account which has been dormant for over 10 years. I just received an SMS from them that an ATM has been issued for me thereby charging me. On this same dormant account, I received regular deductions of money (little though) until they removed all the balance to almost zero. Banks are guilty of improper accountability to enrich themselves.

4. They blackmail their customers and steal the money of the faint in heart: This might be applicable to illegal inflow but banks do it. When they sense such inflow, some banks contact the custom for an explanation or take necessary action. Some customers will have to go by their terms maybe for the bank to take all and abandon the account or cut their share before withdrawals could be allowed to take place.

Banks are crooks...

Most banks still rely heavily on deposits and loans as it is the most stable source of income and has been controlled by superior regulations. However, banks also find that developing new revenue streams enhances profitability and reduces risk. Therefore, banks will continue to develop new revenue streams to ensure stability and sustainable growth. In fact, the central bank of each country plays an important role in managing the currency and controlling inflation.
Controlling the world economy from banks is a complex issue and requires cooperation between countries. The central banks of countries need to have a suitable and coordinated plan to strengthen monetary and economic management, reduce disparities in investment speed, and strengthen public debt management. In addition, the control of the world economy from the bank also needs to ensure risk reduction and increase transparency in financial activities. This requires central banks to continue to strengthen cooperation and implement policies related to controlling the world economy in an effective and sustainable way.

You forgot to mention using of customers money to give out loan to buy loan to well know companies that'll pay them back with interest. Banks don't keep all the money deposited with them in their vault. They lend it out for people to use in doing business. They also borrow the money and invest in forex, real estate and other businesses that'll bring profits to them.

Banks are the wealthiest organization because they control money and money is the most important thing on earth as everyone that has it is in power. Banks have other means which to get money illegally. When their customers dies and no next of kin, they take the money.

Banks generate a lot money from interest, charge and fee, it's already cover all of banks activities which impossible to mention each of them due to each banks has their own features, offers, rules etc.

Keep in mind, even you've calculate the inflation rate in your country and you've pick a bank deposit which give you return higher than your country inflation rate, also you're make sure you're nor get charge due to penalty. You still not beat the banks because banks will always making money even you've think you're the one who make money.

There is a huge field for "activity".
The money of physical and legal investors - do you think they are on the accounts there? On the accounts you see only numbers. And the money itself works all the time as loans / mortgages / installments and other financial transactions that bring profits. Why, if significant masses of deposits are taken from the bank, does the bank suddenly turn out to be bankrupt? Yes, because they live on your money and only at the expense of them.
There are still a huge number of schemes, from completely legal to those that are already outside the law. In our country, in times of rampant corruption and lawlessness, banks issued "their people" deliberately bad loans for hundreds of thousands of dollars, which were then covered by the financial support of the state bank. Yes, this is exactly the scheme that the bank owners built... Thank you that in 2015-2017 the banking sector of Ukraine was cleared of such financial black holes!

Sorry, but what you describe it's still impossible and it's not fractional reserve.
When a bank lends you money for buying a house that money is directly spent as it leaves the bank to the previous owner, you can't do fractional reserves when you're paying money, you can only do that with reserves, that's why they are called so and not fractional loans.

Second, what happens when you're paying back your since this would mean the virtual cash gets erased and replaced by real money?  ;)
Because otherwise, you would have a bank full of real money and virtual money back by nothing, when actually there is real money backing it up!



No, the bank is not making 200 000 out of 20 000!
Just as in the exact line you've quoted from the answer chatgpt gave you the banks sometimes loan 90% of the deposits.
So in your case with a deposit of 20 000, the bank will be able to make a loan of only 18 000!
For a consequent loan, it needs another step, which chatgpt mentioned one line below, the cycle, for that person to deposit the said loan in the bank, which, let's get real is impossible and it makes no sense at all.

So A deposits 20 000.
B takes a 18 000 loan and deposits 18 000 in his house seller account!
C takes a 16 200 loan and deposits 16 200 in his house seller account!
D takes a 14 580 loan and deposits 14 580 in his house seller account!
None of the house sellers are taking a penny out of the bank!
Do you see this as actually happening in any economy or at least in 1% of consumer spending?

But wait, it's not even the 10x loan-to-deposit ratios, that cause
We have A,B,C,D deposits worth 68 780 we have 48 780 in loans and we have still 20 000 in cash since nobody took money out of this scheme.

Furthermore, how is that different from you having 200 000 loaned to your friend with no fractional reserves?
You have loaned him 200 000 and you won the rights to the house, the bank is indeed 180 000 short in cash, but has 180 000 on the loan it has given out! So fast forward ten years from now when the guy pays back his loan, what happens to the so called virtual money?

Banking is a broken system all over the world. They don't have their own money. They take people's money and then lend them out to others. Fractional banking system! And when everyone tries to withdraw all their money in mass, they go bankrupt. And then the inflation happens. Many knows this, many doesn't. Yet we have to use it for some situations because we are in need of it. They are wealthy to a certain point, but why do they go bankrupt? This is the reason, and it's harmful for the economy. Would people stop using it? No because we are still in need of it. But the usage will become less overtime.

Yeah, they earn money from almost every single service that they offer, they are not doing anything, literally anything for free to their customers but they just make it look like they are doing something great for us and we are being provided VIP service for no cost at all, but what happens in the background is that they are charging us for almost everything.

If you only make an estimate of ATM cash withdrawal fees using another bank's card, you will realize that they earn millions or billions only with that in a year, so you can imagine how much they actually make with every other service they offer.

I'm not an economist, but the way i understood this from when i took my loan (how it was explained to me) boils down to

• Person A deposits $200.000 in his account.
• The bank sees this $200.000 and gives an $180.000 loan to person B, whilst the amount of money in the account of person A is still $200.000
• Person B sends to money to person C to buy a house from person C. Person C now deposits the $180.000 in his account
• The bank sees this $180.000 and gives an $162.000 loan to person D, whilst the amount of money in the account of person C is still $180.000
• Person D sends to money to person E to buy a house from person E. Person E now deposits the $162.000 in his account
• The bank sees this $162.000 and gives an $145.000 loan to person F, whilst the amount of money in the account of person E is still $162.000
• Person F sends to money to person G to buy a house from person G. Person G now deposits the $145.000 in his account

So... The actual initial money that was deposited (from selling something, from working, from investing,...) was $200.000

At this point in time:

• Person A has $200.000 in his account and gets 1% intrest per year (for example)
• Person B has a house that's worth $180.000 that's protected by a mortgage and is actually the property of the bank!!! it can be used to fill the hole left by the loan if he does not repay the loan. He pays 3% intrest per year (for example)
• Person C has $180.000 in his account and gets 1% intrest per year
• Person D has a house that's worth $162.000 that's protected by a mortgage and is actually the property of the bank!!! it can be used to fill the hole left by the loan if he does not repay the loan. He pays 3% intrest per year (for example)
• Person E has $162.000 in his account and gets 1% intrest per year
• Person F has a house that's worth $145.000 that's protected by a mortgage and is actually the property of the bank!!! it can be used to fill the hole left by the loan if he does not repay the loan. He pays 3% intrest per year (for example)
• Person G has $145.000 in his account and gets 1% intrest per year

So, from the net view of the bank:

• A has a positive balance of +$200.000
• B has a negative balance of -$180.000
• C has a positive balance of +$180.000
• D has a negative balance of -$162.000
• E has a positive balance of +$162.000
• F has a negative balance of -$145.000
• G has a positive balance of +$145.000

So, with one deposit of $200.000, at this point in time, person A,C,E and G have a total of $687.000
Person B,D and F have a total negative balance of -$487.000

A,C, E and G get 1% intrest whilst B, D and F have to pay 3%.
As long as B,D and F repay the debt, the final balance of the bank is fine. As long as not everybody withdraws the money in their balance, the housing market doesn't crash and everybody pays their mortgage, the bank cashes in bigtime: they pocket the difference between the intrest they give to the positive balance holders and the intrest payed by the negative balance holders on money they don't have at this point in time (untill the loans are repayed)... As soon as they don't, the system is in trouble

I believe that the telecom companies are the ones, who are making money from "SIM alert charges". ;D
The banks are making money from fees and interest rates, but I don't get one thing. What's the point of your forum thread?
Do you want to educate the newbies about how the banks work? Or you want to simply boost your post count, by creating forum threads, which don't offer any interesting information and cannot be used to start a valuable discussion.
I also believe that the banks cannot "syphon dormant accounts of dead people" because:
1.This is against the law.
2.The heirs are going to check if those dead people have any bank accounts with an active balance.

Exactly, and if it weren't for B,C,D,E,F,G  the bank would have had $200.000 and zero negative balances, which is exactly what $687k-$487k does at the end of the line. I like the ending, the bank is fine as long as, everyone that borrows the money pays back, this is quite interesting and I'm sure you will agree with it, as long as customers pay back their debts the banks are fine.
A scenario that will end badly in your friend's situation too if he decides he's not paying back the money you lent him while the housing market crashes!!


Don't you find it at least one bit ironic that almost everyone is angry about banks not guaranteeing their deposits and how the system is broken when the trigger is actually the people who took out loans that are not willing to give back the money they owe? I find it quite a lot more than just one bit ironic!

But anyhow, how could a bank that sets aside user deposits even work? How would they be able to give loans and why would they even pay you interest when they can't use that money and they have to keep it ready for withdrawal at any time? Why would they even take deposits at all?

When we deposit money in the bank, the bank pays us a certain amount of interest based on our deposit. Now we may have a question why the bank is paying us interest.  After we deposit money in the bank, the bank doesn't keep that money, they invest that money in different places and they earn profit in different ways by using your deposited money and they give us some part of that profit. Most of the bank's income comes from providing loans to customers.

Op what you have listed there are all correct. In 2013 or there about when Goodluck was a Nigerian President and he removed fuel subsidy to #75 naira which is also 0.16, and fuel marketers also increase their sales to a very high price to meet up their target, so retailers also increased theirs to make Profit so the final customers bought it with almost $2 and Economist analyst came to a TV show and said if the marketers collect #5 which is also $0.011 per litre, they can still make a huge amount of billions in every month.

So what am I trying to say about the banks here is that. All those changes they are collecting customers every day and some time rich and wealthy customers also give them millions of dollars to save their Wealth. There are some transactions that hang on the air and if the customer did not go and verify what happened for like one to two months time, they would collect that money to their personal accounts. There are different ways bankers make money from customers. Even they cut a little from your account, it's means a lot for them.

Banks generate their income in many ways and most of which were being sourced for through our individual accounts with them, they make these deductiona in form of charges on many services they renders to us and the maintenance they make on our account, this is what you can't get in cryptocurrency because all this form of corperate extortions were made disabled in this new technology of financial system especially when you are dealing with bitcoin, tou have control over the amount you will be charged for performig a transaction and no maintenance fee on tour bitcoin or crypto wallet.

Banks make money off other people's money who trust them to hold other people's money. This means that if no one trusts to hold the money in the bank, the owner will eventually declare closure or bankruptcy.
But the more people trust them to handle the money that is not theirs, the more they will earn, because the bank has many ways to use the money that is not theirs to grow in different ways, such as what op mentioned in real-estate or stock market.

10 years on the forum and you say that the system against which bitcoin was created is impossible.

The first result if you search:

Fractional Reserve Banking: What It Is and How It Works (https://www.investopedia.com/terms/f/fractionalreservebanking.asp#:~:text=Fractional%20reserve%20banking%20is%20a%20system%20in%20which,expand%20the%20economy%20by%20freeing%20capital%20for%20lending.)



If you don't understand that it's not money, but credit, even if you take out the bills and pay for the house with bills, it's not worth arguing about.

Imagine there are two people, A and B.

A gives $1m to the bank to get an interest of 4% per annum.
B needs $1m, goes to the bank, and takes a loan at 11% per annum.

Bank makes 7% on this transaction. This is one example of how bank makes money.

That's why I don't use bank, even in the future. Banks are lowkey milking their customers by sugarcoated words that they are going to make their money "safe" and by giving them "profits". Bank is the only one who does gets benefits from all their users, so I don't even see myself letting them handle my funds.

I'd rather invest it in Bitcoin and let it sleep while waiting for another All Time High. It's much more profitable and convenient for me.

Indeed, banks generate a huge profits from people seeking loans which serves as a major source of income for them. It's rare to hear about banks incurring losses unless they become victims of hacking incidents or similar circumstances. Typically, as you said banks make their profits by charging interest on loans which is one of their primary revenue streams imo.

No, that's not what it's all about. It is about the fact that with the million deposit the bank can create money (i.e. credit) out of thin air depending on the cash ratio. Typically 2 or 3%, but in more recent times even 0%, so that the money (credit) created out of thin air can be multiplied to infinity.

Why isn’t the Federal Reserve requiring banks to hold depositors’ cash? (https://cointelegraph.com/news/why-isn-t-the-federal-reserve-requiring-banks-to-hold-depositors-cash)


In other words, you have to factor in all this money creation, which some people insist on denying, into the difference between the interest you get for depositing money in the bank and what you are charged for borrowing it. 

What some people insist on denying, even though he has been on the forum for 10 years, happens even in the ECB (https://es.wikipedia.org/wiki/Coeficiente_de_caja#:~:text=Valores%20de%20renta%20fija%20con%20vencimiento%20superior%20a,centrales%20nacionales%3A%20Excluidos%20de%20la%20base%20de%20reservas.), which he seems to like so much:


But of course, if you don't realise that in our financial system money is actually credit, how can you realise that there are reserve ratios of 0%.

Banks do sponsor programs on television or satellite broadcast and have been known to do profitable promotions, both to get more money and to add to their investment.
No doubt most banks also buy stocks and shares in bigger corporation and partner on huge profitable projects.
They are the money controller and can even delve into agriculture if that's where the next profit would come from. Of course they can use blank checks.

The amount of biased opinnions here its beyond think.

The only one who have a good point and its in the correct path its @Cuenta Alternativa.

For not quote a ton of message im going to say a few things to clarify some missconceptions.

First of all, in economy we have TWO ways for make MONEY.

Primary money generation: This its in simple way the money who the goverment prints from mint.

Secondary generation of money : THIS its the money who """""generate""""" the private banks, in form of loans, BUT BUT BUT this money its ALWAYS controled by the CENTRAL BANK OF CTHE COUNTRY AND THIS ITS  A PERCENTAGE THEY KNOW HOW MUCH THEY CAN MAKE OF THIS MONEY.

Obviusly into this we have a ton of details maths etc. Im trying to make it simple.

---

About the second way of generation of money aka fraccional reserve, and also for the guy who put the example of guy A put and guy B take a loan and so on, its ok BUT again that its not exactly so free to do, and here im really ashtonishing in seeing some people who talks about BTC freedom and you forget the MAIN actor in economy and in this discussion?

ITs not privates banks, its CENTRAL BANKS and the GOVERMENT, man the privates banks dot give you the interest they want or the money they want, they onle took and give the money at X interest FIXED by the FED/CENTRAL BANK/GOVERMENT. And to give loans to people they need to have bank laces deposited into the CENTRAL BANK, to demostrate they are loaning the correct % of the second generation of money.

And YES in that way the private bank EARN money from them, if the FIXED interest put by the central bank its for example 10% they put the money on that rate at work and offer to his clientes a % below 10 percentage, it can be 9/8 etc.

The ammounts are enormous for that tha 1/2 % can be Billions trillions etc.

This its basic explanation.

So you say that credit is not real money?
So if I take a loan from a bank, this loan is fake money, I buy a car from you the money you get is fake money?
Seriously, stop! The bank is loaning money that it has on deposit, it's real money, that's what's said even in the link you've quoted:


They lend you the money others have deposited, they don't make money out of thin air, the only thing that is wrong with this system is that the money the first person deposited is now tied to the ability of the creditor to pay back his loan, you even have mocacinno example above which should be as clear as the sky is blue!


No, I'm saying you don't understand the system for which Bitcoin was created as an alternative!
Obviously, it has its flaws because there is a need of trusting somebody and taking actions based on predicting future events like the ability of the borrower to pay back, but the rest is just an exaggeration.
Bitcoin eliminates the need for trust is a depositing scenario, it can't supplement the loan part in no way possible!


How in god's name you create money out of thin air when you actually said it yourself you need 1 million $ first ?  ::)

Banks make money ethically by providing financial services and products to customers and charging reasonable fees. Banks make money unethically by exploiting customers with hidden charges, unfair rates, fraudulent practices and risky investments.

Do you know that your explanation doesn't match with the content of your theory or composition, but nevertheless I will like to brief us concerning the way bank's generate their own money, to start with money deposit in your account I was Left in the bank for years, do you know that use some of the money for personal business such as loan to real estate management, and banks generate their income through little fraction deducted from each of the transactions made by the customers, so makes uses your money for transaction business that brings or return much money, and that's the reason while banks like fixed account so that before the stipulated time agreed with the own of the money will reach, they have gotten surplus money with interest with the money.

The easiest way banks will always make their money is from the so called maintenance fees for holding an account with them.

Other obvious sources of income can range from atm charges, bank transfers, subscriptions to be considered a VIP customer when using prestige accounts, charges on dormant accounts, offering a whle range of loans from mortgage to vehicle financing , foreign exchange  etc

Agreed!
People always thought the Swiss bank where the go to bank for some shedy anonymous accounts but forget our own local banks do all kinds of sketchy transactions just to remain in business and to keep their cash flows coming in.

I think that doesn't mean that we have to consider all banks as equals. Not all banks are considered the same and not all of them make the same ways and so forth. Which means that we are going to see some banks just do like loans and savings, some banks do investments, some banks are like brokers, some banks are more like insurance, and so forth. Which means that when you consider just the word "bank", that doesn't mean it covers them all and they all have different ways of making money. I believe the most common one is the bank that takes your money and loans it to others, but that is not the only way of making money by a bank, there are multiple different versions and ways of making money for any bank, it depends on the type of bank it is.

Maintenances fees are the most blatant theft to all bank clients who have the disgrace to deal with them. Fortunately, here in my country they are not common.

At least, with the investment the banks do with others people's money they need to try to make good decisions and do their own research, that requires effort and skills.

Charging people for having an account with you it is ridiculous. Safe boxes fees make more sense.

As long as banks adhere to the applicable regulations, the flow of money will continue to circulate because people understand the importance of credit services from banks for their daily needs. In fact, the ongoing efforts in digitalizing currency have strengthened the position of banks even further. Many individuals now prefer to keep their money in digital form as account balances and opt for transfer services rather than cash transactions. This means that banks need not worry about preparing physical cash in an amount exceeding the balances held by their customers, as those funds are borrowed by other customers.

Consequently, banks can continue to generate money by seeking out more customers and seizing a percentage of their wealth. When this accumulation is considered across all customers, the result is significant.

Bank is a financial transaction institution where anyone can safely deposit their earned money by creating an account. These deposits are given as loans to different people either for business reasons or personal reasons. Each bank provides benefits to one type of people. The customer takes the required amount as a loan from different banks on the basis of a contract. And they repay the money they borrow as fixed interest along with the loan. A bank's main source of income is lending and making money through it. Bank earns by investing in various profitable sectors including shares, loans, and government securities.

Exactly. When we talk about the banking industry, it's much broader than we think, it's not just about depositing and saving as many people discuss daily. So many times when we compare bitcoin to banks, it doesn't quite match. If we talk about safety, privacy, and profit, bitcoin is far superior. But regarding insurance and low-interest mortgage lending, bitcoin doesn't provide those services to us. Like it or not, banking will continue to dominate and be the backbone of the current economy, and that's not going to change or go away anytime soon.

Banks are the largest financial institutions, they are supervised by the central bank so they have strong capital strength, when there are financial problems the central bank will provide additional capital, actually banks get a lot of profit from the credit they disburse, and of course with a large amount of credit, many banks which became a giant corporation.

A very erroneous opinion. Or you are confusing it with another process.

Lending is a procedure when between a bank and a conditionally seller of a product or service, there is a buyer who does not have money. And the bank issues a loan, in a REAL amount of money (cash or non-cash, it doesn’t matter). Those. the seller, in return for his goods, receives real money from the bank. No other way. The seller does not need a promise to pay in the future!

But there is another process, when a bank can, for example, act as a "guarantor" of a certain "collateral". This is a completely different and more complex process, and there can really be “unsecured money”. But I repeat this again - a very specific process with which ordinary citizens do not intersect ...

That is the actual reason why they are afraid of cryptocurrencies and find it a threat because they know how vulnerable the banking or traditional financial institutions have become lately with banks going bankrupt all around the world, even after earning so much money, they can't sustain their business and go bankrupt in no time.

They do have their own money, but they don't use their own money for bank transactions, loans, or anything else, they simply use the money of the people using the bank to keep their money safe and gain profit from that.

And what part of the cryptocurrencies stop them of still making it?

Man, i think a lot of you need some basic economic class, we LIVE in CAPITALIST system, and that system requires ever debt and other things to keep moving.

If you have a industrie and needs to change your equipment, you go to the financial system and take a loan, with that money the system put that money in work, in traditional one, with normal interest rate, assets , bonds ,etc, in crypto they can put in a pool who give them X %, so what its the diference?. Stop dreaming.

Or we dont have here in the forum a lending section?.

I can give an example of how they are supported by the state. For example, in some countries, the interest rate given to banks is lowered under the name of "policy rate". Even though the interest rate is lowered, the banks give loans to the public at a higher interest rate. They both buy the money they lend cheaply and sell it to the public expensively. This is not a positive side of the banks. In this way they are making the people poorer.

Op you have said all. But there are secret ways banks use to siphoned money from customers accounts to their private accounts. Bank workers thief money from customers from various ways. Bank take transaction fee everytime one make a transaction and also take again $2 to $3 every month end. There are some accounts that have been abandoned for some years probably the owner is dead or from one thing to the other the owner can't have access to the account so they siphoned the money to their accounts.

Exactly. These banks can paint themselves whatever color they want to but it's not gonna stray us from the fact that most of their profit comes from shady deals and putting people who are none the wiser to immoral deals and debts. Just got of on reddit seeing a post where a gardener, who just wanted to take up a loan from a creditor/bank to buy themselves a washing machine for around 300 bucks, get swindled into paying almost 1500 all due to crazy fees that no regular person would be able to understand. This is where they get their money people, from abusing regular joes and kicking them in the shin when they're down. Get real and see banks for what they really are, a legal swindling center.

This wouldn't be an a big issue if banks weren't rescued when they go under. Obviously the large banks get preferential treatment with bailouts and special rates. The banks sustain the country's currencies so there's an interest by the state to cover them if they fail. This type of relationship is dangerous for the reason that currency no longer becomes zero sum, and there's incentive by the state to generate new currency should the banking industry need it. Also causes reckless lending behavior if the banks know if there losses are covered.

The function of the bank in the ecosystem is not only about making money or profit, there are even banks that are regulated for the main purpose, many of which return to the main core, besides profit. Yes, ensure that the economic circulation becomes more solid.

What banks do is not just funding and landing, banks are also regulated to create a strong community economic ecosystem, one of which is by supporting customers' financial literacy to make them healthier.

For me, it is the nature of banks to make money and profit because the basic purpose of having a bank is very positive for the community, so it's not as narrow as funding, collecting people's money and turning it over to the bank. If it's just that, how come many small banks have been destroyed because of the superficiality of their vision and mission in carrying out the basic role of their existence for the community.

My only suggestion is that the money that you keep in the bank is turned by the bank into debt/loans and you don't get the profit, only the numbers you see while the bank is circulating your money.

Meanwhile, you pay Admin and transfers per month. So I think it's better for your money to invest in gold, property or at least bitcoin investment than your money is idle in the bank.

Banks money making patterns are deeper than we actually think. We here help bank in making a lot of money with the funds we make available to them but it is disguised as vice versa. Banks make money from one of the following ways:

• fee-based income
• capital markets income
• interest income

FEE BASED INCOME
 Banks can charge you for using their services which most of the time they term it maintenance services or tax. for examples:

• credit card fees
• checking your balance
• Account maintenance fee
• ATM maintenance fee

They charge you for virtually everything you do with them. when you buy shares from them, they make money by selling the shares to you, and also make more money from you by managing your investment. Literally, everything done with bank must find a way designed by them to attract more favour for themselves.


CAPITAL MARKETS INCOME
Capital markets are provisions where banks lure individuals to invest in one or two types of securities: EQUITY and DEBT securities. With EQUITY security funds being traded on various stock and exchange markets. You are entitled only to a "small" portion of the earnings in the nearest future
while DEBT securities are cast on bonds. A bond is still your money loaned by a bank with a standing agreement on the repayment patterns, often with good interests. these interests can be fixed or dynamic in nature. The monies are borrowed out to government agencies or organizations that need them.
the deal here is that banks still get the king share of your own money they borrowed from you.


INTERST INCOME
Commonest way banks make money. This is still the same money we deposit in the banks for safety and later retrieval. Banks trade with these money by lending it out to individuals at higher interest rates and return slim or insignificant profit to the depositors. Banks thrive from this means because people are readily available to deposit money as well as those waiting in their numbers to borrow money and repay at high interest margin. Banks are left to deal with the credit risk and ensure those debts are repaid.

There are still many other ways that they make money like Custodian fees, Private properties management, checking accounts, minimum balance fees, overdraft fees, remita fees. these all fall into one or more of the above broad categories

Banks generate income in the following services that they are offering their depositors  such as interest on loans and on mortgages. The fees for services such as account maintenance overdrafts and ATM usage that is also their source of income. Investment income from securities and other financial products they usually offers. The generate income as well in Foreign exchange trading and other related activities. Another one is the interest, surcharges and fees from Credit card, If the client failed to pay on time the outstanding balance of their credit card the banks automatically charges them with interest plus other charges.

Financial institutions, like banks, accumulate wealth through various means. They earn money through mortgage loans, real estate investments, service charges (such as SMS alerts and transfers), handling dormant accounts, currency exchange, and providing ancillary services like document preparation and safekeeping. Their ability to offer essential financial services and effectively manage these revenue streams contributes to their financial success.

Banks generate maximum revenue by lending to customers because banks pay maximum 6% interest on customer FDs where they charge 10-15% interest on loans. The highest interest is charged on credit card loans where they charge compound interest. Banks earn revenue from your details and many more.  On the other hand, the bank account holders are affected because the value of money has started decreasing day by day in relation to the goods due to the bank not giving good interest.  So depositing money in the bank is now a loss in all aspects.

All that mentions are the ways where banks generate incomes. They also use those save money as capital with those investments
that they involve their company.

They mostly generate a good amount of profits with loans that they provided. Car and housing loans are the common business that they really gain decent profits.

They are using your save money to finance businesses and they are really good at finding the best investment to generate more money.

There are a lot of ways they are doing it, but the reason that they have money is because a lot of people are investing in them. They are trying to make the most out of their deposits and then invest in the right places. That's why some corporations are using shorts to say companies are downfall and making money from their investments. Investment firms have money because some banks also invest in them. That's one of the primary income that they can have for sure.

Banks now are becoming a complicated enterprise that what they are only interested in is to make money from the customers. Banks now are devising means to syphone money from customer mostly through different means. Sometimes they remove tax from your account frequently more than the expected amount and most time they are minute so that the customers will not mind to seek explanation about It. Sometimes I get annoyed about the way banks are charging there customers which is very ridiculous and unethical.

Banks too are business wise though. Irrespective of their mischievous acts, they are good investors. They search for potential businesses with high market demand to invest in which they know will generate much funds for both parties involved.  
Banks and their management do have foresight of businesses that could outperform and they do quickly indicate their interest without you calling them to do so.

I have a friend who told his banker friend about his business plan and how to achieve his target not knowing that his  banker friend took it to their branch manager and upon hearing it, they invited him to invest in it and that was how his business started and today he is doing well for himself and the bank already benefited from the business as investors.

Bank totally works on investor money and saving deposits plus interest rates they apply on accounts.  Bank obviously knows how to make money from its customers along with facilitating them with the best .
Insurance policies are also major earning for banks .

People keep talking about how banks are making profit by giving out loans and charging for stuff etc, but their only cost is not just paying people their savings back, that is not the issue, they are also doing operational costs. All those buildings, all those thousands of workers, they all come down to one thing, spending.

It means even though they are making money from your money and not really spending their own money during that, they are also spending money to give you this chance as well, even the electricity bill is a bill they need to spend, however small that might be in comparison. This is why always have a situation where you need to see the point for Banks as well. I hate them, but I give them what they are due, they always find a way.

The bank includes everything that is needed, all of which requires a fee, so of course the bank will always make money from every customer who carries out its activities, the bank is also always believed by many people who have a lot of money to save it there so that the bank can circulate the money to generate their institutional advantage so it's no wonder the bank will have a lot of gratuity to get because some creditors will try to borrow or other things that the customer needs.

Imagine if the bank has many users and from these users they make transactions every day with deducted fees not to mention deductions every month, plus the interest on the loan that the bank will get is quite large, so it won't be surprising that the bank makes quite a lot of money due to various other aspects.

Most of the bank's income comes from lending interest. They assess who they want to borrow from by assessing the borrower's creditworthiness and calculating interest rates based on factors such as the type of loan, the borrower's risk profile, and market conditions. Besides, the interest rates will be different for different objects and levels of trust. Also, fees from services like account maintenance fees, transaction fees, bank transfer fees, ATM fees, etc. also accounted for a small part of the income. With them maximizing their income sources, it is understandable to be rich.

Aside from the peoples' deposits, there are lots of ways banks generate income.  What stated by @OP are just a few of the services banks are generating income.  I think services generated by bank can be classified into some categories like:

• Interest based on revenue
• Fee-based revenue
• Trading and Investment-Related Revenue

All in all, banks don't just get or generate their income on using the deposit of their client but also offer financial services where they charge their customer.  So even without the deposits as long as the banks have many clients that subscribe to their services, they will be able to maintain their service for a long time.

I use an online bank app and believe it or not, they never charge me a fee for storing money there. I heard some local banks are like this too but there is still a fee in sending money from a different bank company. I guess this is just normal because if we noticed this also happens with crypto, I mean there is also a transaction fee here.

Bank charges are not a form of extortion. Extortion has its own definition. Banks are a business and in bitcoin there are also miners who are doing a business. Bitcoin is only better than the banks because it is decentralized. As long we hold our private keys and keep it in the safe place, we are sure that no one can touch our coins.

Bank as a financial institution which works closely with the Government are highly centralized and even money in diverse means, both in genuine ways and in dubious ways. You have listed some genuine means that banks earn, let me try and list out some fraudulent ways bank earns.

• The dead of their customer, who do not have a proper way of handling money to their next of kin. All their money goes to the bank
• They assist crime and money  laundry
• They sell your data to big corporate organisations
• They collaborate with the government  to seize or obscure individuals funds
• Wrong calculations  of loans, mortgages and more

Heirs, children, wives or husbands are people trusted by the bank for funds from customers who have died. If the bank does not want to return the customer's funds to their heirs, then it is clear that they can be sued for a cunning plan.

Have you ever found a bank freeze the funds forever of dead customers while they have heirs?
I've honestly never heard of it, but banks aren't very trustworthy in certain cases. The reputation of the bank is bad, especially when people are familiar with the modern financial system which is called decentralization.

Here in us there are some banks who has a high maintaining balance if you forget to maintain the amount they will continously deduct it to your account until you don't have enough money. Although it is written and has been in their t&a before you join the bank still it is kinda hard to maintain because of the inflation right now, when you don't have other resources. Other than that banks earns in their credit offers and loans.

Everyone said the right methods, there is nothing to add to that point and if anyone is wondering just how they generate income then they can just take a look at that. But also, we should remember that there are a lot of banks that also has partnerships or right up ownerships of insurance companies as well.

At some point, in history they realized having peoples money in their banks managed to make them so rich, so they built in an insurance company idea. This means you give them money and if nothing happens to you then it is just their money, literally have to pay you back nothing, they only pay something if something happens to you, and that is very important part of it. For example I have health insurance just in case, but haven't used it all year so far, all of that is profit to them. They even use it for investments and make even more.

sometimes the promotions they make offer as if they can serve us very well but there they really use our money for banking benefits. but if we only intend to save, I'm sure we won't feel like they are "squeezing" us. but from some of the banks that I have experienced they rotate customer money in the real estate industry and distribute the results to their investors and their personal profits. I only see the good side, maybe there are also some dark sides that I myself don't understand how they can do it.

Beyond all the mentioned ways of making money, the banks have got big plans to earn and they've been doing it for a decade. We're the highest in population and the country have got more than half the people with bank accounts. The technology advancement lets us to check the balance amount in our account. If we use the ATM to check this beyond five times we were charged. Another thing there is something called minimum balance, failing to do it makes your account go on negative. Indirect robbery is happening and we weren't able to make questions.

Not just in real estate but also in other investments like government bonds and stocks as well. That's where they're diversifying their money and mostly, they're using it to lend it to the other customers. While they give interest for those savings but they're mere amounts and far from the actual percentage that they have from the customers to whom they lend their money.

One incident in my country is where one huge bank has been involved with money laundering and it's not just a small amount but also involving another bank offshore.

Mostly banks generate income through the products and services they provided to their client such as;
Interest income- banks earn interest on loans and other interest earning assets such as government securities, corporate bonds and mortgages. Secondly banks also generate income through their non interest sources such as transaction fees and commissions on services like ATM machine usage, processing of credit cards, and investment advisory services. They also generate income through trading activities such as buying and selling securities, currencies and commodities. Usually the banks uses the customer deposits or savings for them to be able to do trading. Another one bank generates income through investment banking services such as underwriting new securities issues, mergers and acquisitions and other corporate finance activities.

They gain profits that make them rich because of interest or spread based income. They also get profits from sources outside of banking services.
Income from interest is the main priority of the bank. People or customers who want to take loans are very concerned about them because they, as the bank, know they will get a lot of returns with a set interest percentage in a matter of time.

That is why many people are unable and willing to cooperate with official financial institutions under the legal auspices of the government because they do not want their lives to be pressured by the banking system.

Bank utilize customer's money to make more profit from there, like giving loan and collect interest or investing on stock market. They also utilize customer's money for their personal gain as well. Investment is the source of bank, more we invest, more they earn. Apart from this they earn from If the account falls below the minimum balance it may be assessed fees for not maintaining minimum balance. Bank generate more income from locker rent, trading profit. Message alert charges, ATM charges, transaction charges etc, which people never notice.
 

As a long time financial advisor, and someone who’s worked closely with banks throughout my career, the main reason I “got in to” bitcoin back in 2014ish was my utter disdain for banks and how they were ran. So much corruption and bullshit, and I was fascinated and blown away with the technology that bitcoin brought to the table for the first time.

You forgot to mention they make money, A LOT OF MONEY, by scamming the shit out of their customers.

there are so many ways. the mains are interest on loans, interest on deposits, fees and service charges, credit cards and payment services. believe me they earn too much.

To be honest banks no need to make money by doing all these but they do for the sake of keeping the balance and trying to show you that this is also some kind of business however banks can create money out of nowhere I mean the central bank of a country and they distribute it to all the banks and let them to inject the printed money in the name of loan. The interest rate difference and all other charges are like side hustle for them.

Banks generate income by increasing their value and going into public market ad IPO, many banks made money in that way as far as I know which is huge compared to making money in actual way.

But can you atleast imagine a scenario where the heirs, children, wives etc are not aware that the deceased operates an account with a certain bank. Does the bank go around, finding a way to disburse su h money. Or atleast, after 5yrs, do banks make public some dormant accounts to verify if the account holders are still living?

revenue composition may vary for different banks, depending on their size, business focus, and geographic location. Additionally, banks also earn income from other sources such as investment banking, wealth management, insurance services, and asset management, but those may not be as directly related to traditional banking activities.

You forgot one thing about crypto. In this case, I am talking about Bitcoin. It has limited supply, which will prevent it from inflation. Can you say the same thing about fiat money, which banks use? Banks will print more money and “HELP” you with it. The rich will get more rich and the poor will struggle. This is the reality with traditional banking. With crypto, the concept stays the same but many things changes with it. And trust me, those are not bad things.
We need full adoption of crypto and use it as a replacement of banks. But as we know, as long as there is demand, people are bound to use it. So we need a way to ensure that they both can co-exist in the same ecosystem. Banks are necessary evil, IMO.

Generally, a bank makes most of its income through loans, you leave some money in the bank at 5% interest, then the bank lends that money to others at 10% interest. Then at the end of the year the bank gets 5% profit. This is how banks make money through giving loans. About 90% to 92% of money banks earn this way. Banks have other ways of making money, one of them is making money through credit cards. Banks that issue credit cards to people spend the money on the credit card and have to pay that money back with "interest" every month. And banks charge them "high interest" for late payments. This is how the bank earns money. Banks also earn money in various other ways.

I'm sure the bank will rotate its customers' money as investment capital which is profitable for them. so they can still return the money we save in the bank as customers, they also benefit from their investment, which should use our money. but they are really good at choosing the industry in investing. they must succeed on average their investment rarely experience losses. I believe this is the main income from banking.

The bank benefits from the loan interest given to the borrower with an agreed guarantee. Then from the ATM card one of the sources of income they get. Regarding them using the customer's money for other activities as long as there was an agreement between the two parties at the beginning, I think what you are conveying is only an assumption because customers have rights and obligations that must be obeyed by the bank.

The customer has the right to the money deposited in the bank because initially the customer and the bank have agreed on an agreement as evidenced by the signatures of both parties.
Before the customer chooses a bank to save money, of course the bank will explain the product to the customer and the customer needs to know all forms in detail.
Banks are required to return customer deposits when all terms and conditions have been completed in their intact form which are still valid for valid payments in conducting transactions.

Banks that can collection of money from consumers are certainly very benefited, they will easily provide loans to anyone with interest that can reach 3x than interest given to customers, besides that usually banks also buy shares or investment products that have very good and certainly safe value , for example, a government debt letter that can provide a profit of at least 200% compared to interest that must be paid to customers.

Banks generate income usually through interest. Banks make loans and typically charge an interest rate on that loan. The loan from the bank to the customer earns interest on the loan and earns income for the bank. And banks are charged legal fees for every transaction which serves as a source of income for the bank. and from these fees the bank earns various margin profits along with rising cost of their operations. Banking provides savings services where customers have monthly savings added to their accounts.

Interest from loans was their real main income, which included things like having your title to land lent to them, motorcycles, and anything valuable. It seems small on a monthly basis, but if you total it, that is really huge, and it is almost the same price as what you've borrowed; you just didn't notice it. Also, I've noticed that in small banks, they always have easy loans for you that you can avail of easily, as that is their source of income.

I guess this is how banks operate and earn money due to the liquidation that they engage in. Imagine, you are loaning millions of dollars daily and the return rate of such loan takes time on their side. While this may be convenient for the people who took out the loan, this will also cost them money in the long-run due to the interest rates being paid.

Personally, investing in banks should be considered if they offer low interest rates. If you are planning on taking a loan also, go for shortest time since the longer you pay out the interest rate, the more expensive it would get in the long-run.

LOL.. it is easy to see how banks are generating income. I have a plot loan with one of the banks. When I initially took the loan, the interest rate was 6.6% per year. That was one and half years ago. Now the interest rate stands at 9.3% per year. On the other hand, I have term deposits with another bank, and the interest rate has remained unchanged at 5.5% per year (we need to pay tax on this interest income as well). When they are taking money from us at 5.5% and then giving out the same money at 9.3%, how can they end up in a loss? My only question is where all these profits are going.

that's what only appears outside, what actually happens inside is much dirtier than that. I know because I have a friend who works in banking, he said that many of them are involved in money laundering, bribery, asset hiding and many other dirty practices. so do not be surprised that banking is one of the dirtiest institutions in the world.

if they don't do these dirty practices, it will be very difficult for them to survive and retain their customers. especially if they have super-rich customers, they have to keep their customers from running away to other banks, and keep the assets of their customers safe with them.

As stated here, banks earn through various methods but the biggest source of income for banks is income from debt interests. This income method is provided from the interest difference that occurs after the deposits deposited in the savings accounts in the bank are transferred to individuals or businesses in need of money with a higher interest rate. In this way, individuals or companies that have savings and individuals and companies that need borrowed money can meet their needs reliably. This is the biggest source of income for every bank as I mentioned.
The biggest source of income for banks after this is obtained from the usage fees of the services offered by the banks. The commission income generated by these services offered to customers is also a method for banks to generate high amounts of income.

I want to ask a question to people who have a large amount of savings in the bank, come and don't say beforehand that you want to withdraw all the savings you. See how their employees react? I believe in their safe there is no cash that can be given directly to you and they have to call the center to get the money to the branch. That's how they manage the customer's money and I also remember how the bank only keeps the total value of your money but they never keep the physical amount in their safe. There are many problems with this system and it is like a cash cow that will continue to drive human dependency.

I don't want to get into how they make their money because they are a financial institution and automatically there are many ways for them to make a profit. If you are from Nigeria, have you ever experienced a time when your fiat currency was scarce and not accessible to services when you wanted to withdraw money and I remember a post from my Nigerian friend saying they were short of physical cash in the bank resulting in long queues at that time.

Currently the most famous financial services are banks, because they can do many things related to the needs of consumers or customers, and they very much benefit consisting of several things as you have mentioned, then banks are currently one of the institutions that can get very large profits until they have many branches in all regions, When there is a problem in the bank, many business people feel disturbed because they cannot make transactions as usual, and for the future the bank will always be a mainstay for all people.

As long as we keep using the banks, they keep having the opportunities of using our financial asset to make their own additional money through the deposit we made with them, they make use of this same opportunity in their own favour by making unnecessary and unexpected deductions on our money, charge us any amount serving as bill over the use and maintenance of our bank account, ATM card and other uncalled means like sms alert charges, stamp duty etc. We could see a variety of ways they source out from us means of financial illegal generations from our money.

I am sure everyone today must use banks for storage of their assets, because banks are now fully trusted by the public because the security they apply is very high so it is very rare for us to hear of break-ins at certain banks, and banks are currently one of the institutions that can get very large profits, because there are many ways they apply to be able to benefit and can help many people so many  The program they apply can run well, so don't be surprised if the bank is a very rich financial institution.

Good a thing you're surprised at this information and you may not be the only one. It's so unthinkable that in some countries especially those of the third world countries every bank services are being paid for by the customers even to the extent of checking of account balance and receiving of money transaction both the receiver and the sender are charged fees. And this policies necessitates the question, what exactly is the profit gain of the bank account users except for pillaging of their little funds by the bank but by bit through incessant fees with no % of interest giving to even savings account holders at the end of the month's but it's rather the opposite over here.

Banks generate income through different product and services like one of the primary ways is by lending money to customers at a higher interest rate than the rate at which they borrow money from other banks or the central bank. The difference in interest rates, known as interest rate spread allows banks to earn a profit on the loans they make. Banks also charge fees for various services such as account maintenance, ATM usage and wire transfer. Banks may invest their own funds in various financial instruments such as stocks, bonds and real estate to earn a profit on their investment. Some banks generate income by providing advisory services to clients or by offering insurance products.

What do you mean by product?  I have no idea that the bank has any products. Because I have always known that banks always provide various services like lending, processing international payments, keeping customer's money as collateral etc. the bank keeps the customer's money and then lends it to other customers and takes a high rate of interest from it and gives some part to the customer and keeps the rest for themselves. From here the bank makes most of their profit. And some other charges are taken from the customer like SMS charges, maintenance charges, credit/debit card charges etc but it they are taken annually. The bank earns a lot of income from here too

Although the information you have given varies between countries but it is partially correct. The sources from which banks provide the largest flow of funds and money generally consist of savings provided by clients. In addition other options with high income are provided from the commissions obtained from the service fees offered as well as the income from the investments as you mentioned. Finally, considering that banks operate in the service sector, can you explain what you mean by the "product"?

The methods used by the bank are always considered legal even though they apply illegal methods by carrying out the main activities of banking services that the customer does not know about. The presence of Cryptocurrency has disturbed central bank authorities, the ease and speed of transactions makes some bank customers trust Bitcoin more than bank authorities.
The banks are very aware that the presence of Bitcoin is a threat to them, if everyone believes more in Bitcoin and other Crypto assets the bank will soon go bankrupt because no one uses their services anymore. Banks are like leeches that always suck the blood of their customers. They will not be responsible when there is lost customer money, so I don't really trust the bank.

Product is something that is removed from a process.
So my view of bank products is the service itself (Services = Products/Products = Services). That's the mindset about the product that is issued, the things that are issued are products either in the form and non-shaped. You must understand that the product does not always have a shape.
So the service is also a product, both borrowing money, savings, cash withdrawals, ATMs and others are products from the bank authorities .

I'm not disagreeing with your opinion but, It is important to distinguish between personal opinions and generalizations. While some individuals may have concerns about the banking system and prefer cryptocurrencies such as Bitcoin for various reasons, to claim that a bank engages in illegal activities or deliberately deceives customers is wrong and that only bad persons have dirty minds stealing customers' money. and the consequences will also apply. just like crypto also related parties trace it where the money went.

Banks operate within a legal framework and provide various services such as lending, investment and transaction processing to generate income. Trust in banks and cryptocurrencies can vary between individuals based on their experiences and perspectives I think.

Banks are one of the oldest institution created for the purpose of handling people's valuable assets & properties since many centuries ago, such as gold, money & documents. But apart from what you listed above, here are some other two important reasons how banks generate income, such as lending loans to people in need while charging high interest rates, and also using money deposited in fixed accounts for forex trading, and other low risk investments such as buying company shares and bonds, so it could appreciate so as to make more money.

they are smart in business, I'm sure every bank has a good financial adviser, because of that they can last a long time in their bank business. take advantage of businesses that are very suitable for their profit fields in customer money circulation. if what you mean point is in they earn, well that's one of them, but i believe they still have big investment behind it to generate more profit for the bank itself.

Banks are dishonest, but I assume that anybody with large sums of money in their bank account will inform their lawyer, wife, or children about the status of their account and what to do when they are no longer in existence. However, it is the responsibility of the banks to locate the next of kin in order to have access to the deceased account and do whatever the will says, but I have seen a situation where the bank declares a person's account to be dead; banks are fraudulent organizations that cannot be trusted for one second; it is like putting your life on a ticking time bomb that could blow up at any time.

All that you listed is right, though some are official and legal while some are part of their mischievous and dubious act. Also, they get money from interest on loans and some people lost access to their property when they default on the payment.

From the experience I have had banking in my country, there a lot of ways that banks generates income , such as through disbursement of loans, and service charge such as ATM card maintenance fees, sms charges, ATM issuance card charges, withrawal charges from using their ATM machines and whole lot of other changes that they generate their income from like the FX market. But their major income generating source is through giving out customers money on loans on high interest rate while they pay the savers peanut for the money in their account.

Here are some additional details about how banks generate income:

• Loan interest is by far the largest source of revenue for banks. Banks make money by charging borrowers a higher interest rate than they pay depositors. The difference is the bank's profit, known as the interest spread or margin.

• Fees and charges have been increasing as a source of revenue for banks in recent years. Banks charge fees for everything from checking accounts to wire transfers to overdrafts. The larger the bank, the more fee-based income they tend to have.

• Mortgage lending has become highly profitable for many banks. Mortgage interest rates are usually higher than other loan rates, and mortgages are paid back slowly over 30 years.

• Credit card income also consists of both interest charges on balances and annual fees. Late fees and penalty fees also add to card-related revenue. However, credit card loans tend to be riskier for banks.

• Revenue from investment activities is dependent on interest rates and financial market conditions. When rates rise, banks' investment returns typically increase.

• Interchange fees - the small percentage banks get from every credit/debit card transaction - can add up substantially, though regulation of these fees is increasing.

• ATM fees have become a notable source of revenue for large banks that have extensive ATM networks. But customers generally dislike these fees.

• The "float" is the least transparent source of income for banks, but it can generate millions due to the large deposit volumes that banks handle.

So in short, loan interest remains the most important revenue source for sustaining bank operations and profitability. However, fees, premium services, and other sources are important additions to a bank's overall income statement.

This is the cons when you do trust up that much these institutions on which on the time that there would be no claimants of those richness that you do have or simply the money you do have in bank then it would  
really be considered to be forfeited or they would really just simply absorbed it. We know that there are lots of sources or ways or methods on which they could make out money which is simply into those giving loans into people and businesses which their rates are really that high compared into the dividends and annual interest that they do give out into their depositors. These institutions would be using up peoples money
for them to generate revenue or income on which sounds to be great right?

they collect money from customers with the title of savings and they lend it back to customers with interest that is greater than the interest on savings, so they get profit from it. On the other hand, banks also trade on the stock market or other markets, so they will get a bigger profit from that too. even though there are not a few bad loans, they also have calculated the risk from the start, so this can minimize the risk.

Running a bank has been a lucrative business in the past for its owners, but this doesn’t mean that all banks are a money printing business. Over the years there has been quite a lot of banks that went bankrupt. Even this year we saw big American banks struggle with the continues interest rate rises by the FED. The main business of the bank is to match customers demand and supply for money. Usually, you have one side depositors who leave their money long term with the bank and are looking for some interest on their savings account. Against that you have the borrowers, that require money short term for consumption, investments or mortgages. The bank charges higher interest on their loans than what they are paying on the savings to make a profit. But there is a maturity mismatch between deposits and loans which creates risks for the banks. Especially when there is a huge deposit outflow the bank will struggle to meet the capital requirements. Now with the new high interest rate environment it becomes very expensive if the bank needs to raise money itself to meet the outflows. I think that the banking business model only really works for the largest banks that have millions of customers, because the government would always step in to protect the customers and can’t let it go bankrupt, for smaller banks it’s much riskier to operate in high interest periods.

They bank will generate income are The main business of the bank is to match customers demand and supply for money and The bank charges higher interest on their loans than what they are paying on the savings to make a profit and Now with the new high interest rate environment it becomes very expensive if the bank needs to raise money itself to meet the outflows and The difference is the bank's profit, known as the interest spread or margin.

From everything that you have listed, it is obvious that the summary is of how banks generate income is through other people's money. That is how financial institutions stay wealthy. They use other people's money, invest in businesses and make a massive ROI. Banks don't have money of their own.  In addition, if you have ever taken out a loan from a bank, you'd be amazed by how high the interest rate is. It's crazy. This is another way they generate income. Other people's money and high interest rate sums it all.

If governments do not take the necessary steps, interest rates in banks are constantly rising. People who need money in countries for reasons such as inflation experience difficulties due to high loan interest rates. In such cases, banks always make a profit. This shows what kind of a system we are part of. In the near future, the repayments of loans taken with high interest rates will also be delayed and another problem will arise.

There are many other areas where banks generate income. Real estate investments, land investments, company operations, etc.

Number one of their income is obviously lending  ;D it could be lending to other bank like credit suisse case or lent to other people, a company or government project or lend their money to the government bond. the point is they generated money from lending. and that is pretty much 90% i think  ;D

Another things is through transactions, you are not giving the service for free. But biggest source indeed is through lending or loan (in my area). It allows the bank to make their funds revolve around their users with monetary interest. It is the nature of centralization which made this possible and if we would compare it from this technology then there's a huge difference with how money flows. As we all know, banks have plenty of users which is considered aspect of bank. In this industry as well but centralization and decentralization are far from one another. As ive read in the replies, banks has the weath and all but due to centralization, they are also liable withnegative tendencies such as losses.

I know banks give loans to company or people that need loan to grow their businesses with high interest, I know that's another way which banks use to get money, when they are giving loans, their interest rate is crazily high. Also  their are some little amounts that banks deduct from customers accounts that some customers won't even notice, but if those amounts are combined together, you will see that it's a huge amount of money, that's another way that banks are using to steal customers money and they are using that to increase their own wealth. Their are lot's of illegal ways which banks are using to steal from their customers

It can be said that the biggest profit of banks is from their lending sector. But what's wrong with that? Many people say that the bank is taking our money when we deposit money. That's true but it's the art of business, and if we don't like it, we don't have to trust them and no one is forcing us to give them money. Like many people on this forum are also making profit through lending.

Right, even in my country lending might be the fuel for banks and it might happen to other developing countries. I also watched some youtube channel that discussed about curent bank collapse the SVB bank and they showed the basic of the bank too - https://www.youtube.com/watch?v=E_VKZ6dzauo


Nothing wrong with that the OP asked how do bank generate income and most people here answered it, the things it would be wrong if the bank used all of our money and goes bankrupt  :D

The interest they give to every loan is somwtimes actually high that it really gives them a big time profit and earning. Imagine not paying in time would give you an extra payment? That's how they generate money plus I don't know if some bank literally have connections in each other because if you use other bank's atm it will cost you too much fee since the bank you have is not available in some places so you have no choices but to use other bank that will cost you too much transactions fee from my experience. This is centralized work that's why most of the people prefer to use decentralized system.

I think banks does this on purpose so they can benefit from the extra charges they get for using other ATM that isn't theirs. Sometimes the banks will claim they don't have money in their ATM so you can make use of other banks ATM then they charge you for that transaction. Banks has multiple ways of making money from their customers. They can also make money through maintenance chargers.

Some banks charge when you make deposits and also withdrawals, the banks are scamming us and that's why bitcoin is better because we don't have all this changers expect miners fees but it's not as much as bank charges unless when the network is congested.

As we know that banks are a business that promises big profits, banks collect money from consumers from savings to deposits, when banks get customers who want to save in the form of deposits, banks can freely rotate money, they give low interest to customers and apply interest high at least 2x so that banks get a lot of profit.

Also, don't forget the fees. There are a ton of fees that we are paying to them, but mostly they are on interest, as when we talk about banks, we always think about loans and also interest, which we know is only a small amount, but still, there are a ton of people getting loans from them and also investors in them. Also, there are banks where farmers can easily loan their land, which also has interest, and other farmers can't pay it back, which would become property of the bank, and we are talking about land that is hectares big.

It is correct that main source of income for banks is from loans and mortgages, they provide to individuals and businesses, but I think it is not correct all banks are  involved in fraudulent or scams activities.While it is true that there have been some cases of unethical behavior by some financial institutions in the past that doesn't represent the entire industry. The banks all over the world operate within the regulatory framework of central bank and the role of central bank is to make sure that they adhere to the regulations and safeguard the interests of customers.

The game of its owners must have a clear difference, sometimes looking at the profit as well as the risk that the bank may encounter during its existence, we can understand the reason. Some problems today when money becomes a tool to govern everything and the operation of the bank gives them many different voices, over time it will have to change the way it works ike to think is also inevitable. But the different profits that the bank earns also accompanies the development and change of people, from ancient times to the present the value of money always needs its own standards, so does the banking system exist in different concepts.

agree, it is clear that the profits received from the bank are very large by using customer funds to rotate and lend to those in need, where the interest set for the borrower is greater than giving interest to customers.
but that is the compensation that is obtained from the movement of banks and it is natural that banking products are very profitable and interrelated and need each other between savers and borrowers by using banking facilitation.

This is not true. It's a serious accusation you've made here. I was once a bank employee in my life, and I know that bank is not involved in the illegal activities you mentioned. Do you think the regulators of the bank, particularly the central bank, would tolerate this? They would not, and if they discover any serious violations, they would promptly close the bank. Banks that deceive their customers have no right to operate a business built on trust.

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So how do banks promises big profits?

That is how banks make money and that's why more and more profits are coming into them because they're good at spreading investments and making the most of it from people's funds. Everyone needs to understand that it is the business model of the banks, if you don't like to earn a little percentage of your money from them then you shouldn't keep it with them and instead, you should make your own business from your own money or investments as well.

Thanks for letting me know your opinion, but I must tell you that I also resigned from a bank in 2014 for me to pursue a better goal, so I have experience also. What I iterated above are clearly not the obvious ways of generating money by banks, but I'm afraid that it is with it and its top employees and owners, these people are corrupt, only that they are cleverly doing it.

You might not know, but they do these and they do it cleverly to the extent that the CBN might not know, or connive with them for their own cut. Even if the auditors detected at times, they know how they settle their ways.

Try to investigate this online and you will be surprised by the bank frauds you would realize.

The big US banks such as Wells Fargo, JPMorgan Chase, Citi, have all at once point or another doing shady stuff or laundering money for others, before getting caught and being made to pay comparably small (for a bank) fines by the department of justice.

But I think banks mostly make their money off of interest rates, no? I mean, when you open a credit card, which is all too common nowadays, you are literally getting a monthly loan for the amount you spend and you have to pay that off at the end of the month, else the APR gets higher.

Can you cite an example of other banks regarding your accusation of illegal practices in banks? It would be better if you could provide evidence yourself to support your statement instead of suggesting that we search for bank frauds.

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I'm referring to this accusations.


This one alone is impossible as bank account holders are not stupid, they would know if there are unauthorized transactions charge to their bank accounts.

It's true that this is indeed a scheme from the bank, they use customer funds to generate profits,
the more customers, the more the bank generates profits,
something like that is actually a reciprocal and that's good.

Banks have different kind of services that create income for them. Interest income is the primary way that banks generates income. Banks lend money to borrowers at a higher interest rate than they pay on deposits, generating a profit margin. This is known as the interest margin. Banks also. earn interest income by investing in securities such as government bonds or corporate debt. Fees is another source of income of banks. Banks charges fees for a variety of services such as account maintenance, overdraft protection, and wire transfers. Credit card companies also charge merchants a fee for processing transactions, which is shared with the issuing bank. Banks also generate income through investment gains.  Banks generate income through a combination of interest income, fees, investment gains and other activities. The specific mix of revenue sources depends on the banks business model and strategy.

Banking services have indeed been made that way for a long time so this should not be an issue in my opinion. Because some people don't want the bank to make a profit through the money they save, they definitely won't put their money in the bank. But what we see now is that almost everyone wants to save money in a bank when the bank can guarantee its security for everyone. So I think it's only natural that the bank takes advantage of this.

Reciprocity in terms of mutual benefit is indeed good, but in that case the bank's customers only benefit from the security sector in saving money, while the bank can do more than that because they can get another profit in the form of money through the circulation of money deposited by customers to them and I think that it is also very reasonable for the bank to do because basically they also take care of the money of everyone who has become their customer.

I don't know the country you are my friend, but this often happens in my country despite the strict regulation in the banking industry. And I have read that CBN had sanctioned banks several times for this, that's for those who complained, so it happens. The percentage of those that do not complain is larger, this is because the amount charged is insignificant most times, but this is a substantial amount for the banks when you sum it up over time.

Personally, I am a victim of this many times so I didn't form it. And I say this without any apology, at least three banks namely, Ecobank, Acess Bank and FCMB have charged me in either an unexplainable way or dubiously.

Now, let me take it one after the other by the bank and I will use USD for conversion clarity.

1. I left Ecobank because it charged me some persistent unexplainable small amounts, and this happened until the time they charged me about $4 which they can't explain. When I complained it took the operation manager about 1 hour to restore it back and he confessed to me that he didn't even know the reason they charged me. But to my surprise again, they removed another $4 the next day. So, I left the bank.

2. As for FCMB, there is no time I keep money there that I meet the money intact. If I keep about $1000 there, I can be sure to meet $999.90 the next time I check it even without making any transaction. This was regular for years before, and the most annoying thing is that the charges don't reflect on my statement as charged for anything.

3. Access Bank was the worst, aside from regularly deducting unexplainable charges on an account I abandoned with them for years, they still went ahead to issue a debit card and charged me on an account that has been dormant for over 13 years.

Thank you for this. I also know there are ways they still make money genuinely but was just referring to other shady deals that enrich banks.

As a rule, banks provide their loans secured by real estate or movable property such as cars. At the same time, the appraised property is significantly underestimated in its value, and if the client for some reason could not repay the debt, then the property is sold by the bank or the bank retains it. At the same time, the profit from such a sale is much higher than the collection of ordinary interest for using a loan.
In addition, significant profits for banks bring the collection of penalties for delay in using the loan.

Bank have no other financial way of generating their income than the charges they deduct from our individual accounts and how they engage our money in doing other businesses that fetch them more money than we ever imagine, if we ever have an idea of how they generate from us through the deposit we make with them on our account ad yet still make indiscriminate deductions,  that same day we will stop using them and withdraw our entire money.

If a bank doesn't have clients to funnel money into them, there's no reason for them to make a profit. Therefore, the income of banks is based on the deposit of money by their customers who will trust to hold money that is not theirs.

In addition to that, when their clients start depositing money in their bank, there will be an opportunity to start generating income for the bank, by depositing money in the stock market, real estate, lending, and so on.

If you fully understand the setup and you have a good trust in yourself in keeping your money, maybe you won't hesitate to
do it by yourself and let you hold and save it in your own vault.

But, most of the people are not that secured by their own ways as they needed the help of the banks to store their money, you are right
there are cycles that banks are doing with the depositors' money and they are good at doing it, especially in finding resources to invest.

It's the system and how the bankers playing on it that makes them more money from the depositors' assets.

Yes. Not only in crypto there are taker and maker fees, Gold purchases also have a fee for making. So wherever we go all costs arise especially at the Bank when transferring funds to a different bank. It's all charged to customers or users. If indeed there is no cash balance, it will be debited directly to the customer's account, but of course with approval and done in front of the customer. maybe this is what makes the customer a little safe because there is confirmation from the bank. Conclusion everything has a cost associated and attached and nothing is free.

Banks have many systems of income, banks usually adopt different ways of providing loans.  They give loans to people in various ways but in return they charge a fixed interest.  Mainly the income of the bank is through the customer. Banks give different percentages of interest by maintaining different policies to the customers.Like high interest for business loans and very low interest for agricultural loans.  But for agriculture loan will not give you much credit.  Also, if someone deposits money in the bank for a period of five years, then in that case he is given 5% interest, but they lend that money to customers at 10% interest.  They are making profit by lending customers money to customers.Although banks have good security systems but still no system can guarantee 100% security.

Banks collect money from customers and give interest to customers with a small amount, in my place the highest official bank interest is only 8% per year, but banks receive interest from borrowers around 24% per year so it has a very large difference.

Banks generate income in different ways. One of the sources of income of banks are the interest they earned in their products and services. When bank lends money to borrower, they charge interest on the amount they borrowed that will become the banks earnings. Usually the interest rate is higher than the interest paid to depositors. Another source of income for banks is through fees that are being charged to various services like in ATM the withdrawal fees and balance fees, they also charge transfer fees in overseas wire transfers. Banks also generate income from foreign exchange trading etc.

Why they can, it's because they (banks) are protected by regulations from the regional government or the state which is considered capable of managing it properly and correctly. As for the bank's additional income, I think they also show the rules of the game, for example, if you apply for a bank loan, they also show the borrower a table of calculations. If you agree, sign and pay the installments.

If regulation of this digital currency also gets the same treatment, I don't think it will be much different, and will be an attractive option in the future. Take a look at how the US government is working today to Binace, which made the market red a while ago.

you are right, the bank can carry out regular activities well because of the income from customers who keep their money there. It is clear that each customer's money will be moved so that the bank is able to receive benefits from the movement of the customer's money, the biggest of which is to provide loans to creditors with interest rates greater than the interest given to customers. the difference generates profit, which is used by the bank to be able to drive the activities of the bank. Of course, not only from customer money, banks get funds to carry out activities, it can also be from bank owners and investors as well as loans from large banks with lower interest, of course.

Yes, I agree with you, income of banks is based on the deposit of money by their customers apart from this the profit from such a sales loan is much higher than the collection of ordinary interest for using a loan. A secondary loan participation or loan sale is a contract which sales the cash stream from an underlying bank loan to a third party. There are more earning source for banks such like from penalty, this kind of fee use to collect from people who are not able to pay their loan at time and when a specific term of the loan contract is violated.

Adding to all you've mentioned so far, banks also claim monies of their deceased customers  and this is the very one that is always very bad as rather than seeking to know what happened to their customers who suddenly  left some reasonable  sum of money in their care without checking,  they suddenly  assume the person is dead or even trace to know the person is dead and when no family member traces the money, it automatically becomes property of the bank and I'm saying this based on a recent happening  in my locality.

Op you already listed all the ways banks make money but I just want to say in my friends voice that illegal money is the money that will give you all you desire and banks also indulge in illegal acts

In Europe banks have come up with a charge from 1-3% depending on the country you are on money on arrival.For example if you exchange crypto through some exchange online and receive money in your account,let's say 1000 dollars the bank get from 10-30 dollars in just one single such transaction.This was not before and this means that the banks are always looking for more ways to "steal" people from money that they belong to them,just like in this case when you got money in arrival.All other mentioned ways of course are well known,just wanted to add this new invention of Europe banks from about 7-8 months now.

That's huge. I mean, you are paying them a fee for just a transaction like sending or receiving, and all banks in Europe are doing this? This is very hard for the customers as they are forced to pay that fee, and I would say it is some kind of theft. We are just lucky that this is not the same in our country if you transact within your bank, but if your bank is different and you transact to another bank, that is where the fees start, which are also huge but not the same in your country.

True, that's reality that happens with bank users who died. If there's no claimant of the money,
eventually the money will somehow go to the possession of the banks.

Or, even it's in the maintaining balance, the money will continue to be used as part of bank investment,
they will use the money to make more money.

One of the way where banks have an upper edge to accumulate more money with the money of users who
are not using their money and just leave it as savings for longer time frame.

It's a crazy charge and the first time I've heard of it. Honestly, I don't believe in that charge. If I remember correctly, the transaction fees of banks in my country range from 0.1% to 0.3% or less, and that's a hefty fee for many people. I don't believe that is happening in developed countries like Europe, and their people will accept those huge transaction fees. Even e-wallets don't charge such high fees, how can banks do that? I really doubt these.

If you keep money in the bank, a certain amount of money will be charged every year based on your money, and if you are given an ATM card, the bank will charge you a certain amount after a certain period of time for the ATM card. 

A portion of the money deducted by the bank for keeping money in the bank and for the ATM card has to be paid to the government as VAT. And if you put money in the bank, the bank doesn't keep that money for a while, they invest that money and give loans to different customers, and as a result of giving loans to customers, they take some amount of interest from the customer, this is a part of the bank's profit.  If you keep money in the bank, not only will the bank deduct the charges from you, you will be given some amount based on the profit of the bank, based on your money, which you can take as interest on keeping money in the bank.

Banking is also another form of business to make a profit, if you don't like the way they treat you, you can stop using their services, I'm sure they don't need you.  i don't find it funny that we constantly criticize banks because they are just business people looking for profit to make a living. if you are not satisfied with them, you can simply stop using their service, but if you still use the bank, badmouthing them won't make you any better than them.  I'm not defending the bank, but no one is forcing us to use the bank if we don't want to.

Bank's make their money from different sources, they are most times involved in stock market trading, Forex trading with the helps of expert traders that can predict the market, they all make their money from loan facilities they gave out to customers.
 
The Banks are always happy when a customer makes heavy deposit, because they use that deposited money and invest in business that will give them huge returns in a short period of time, don't forget that, customers pay for account maintenance, this money runs into millions by the time you multiply it with the number of customers they have.
All of this helps them to maintain operational cost, like paying if salaries, utility bills and a whole lot more.

Also my first time on hearing out on having those deductions on the time that you would really be making out transfers on your account which is really that totally different on what most countries do have when it comes
to this manner because once you do transfer out then its would be completely a whole amount and not being deducted because this is really indeed that stealing. What are those deductions for?
I would definitely be not storing or making some transfers into my account if this one would be the case. 1-3% is horribly not that unacceptable.

Banks do generate income on giving out loans into people which they do charge up 1-2% per month interest while those deposits or investors who had been storing up money on the bank
are just given 1-3% annually on which we could really make out some serious income or money on this kind of way. Losses are there but in the end of the year they are really
generating that huge profits out of this concept or system which its not shocking.

I don't know how many times that has happened to me, and the worst thing is that it is claimed and they turn a blind eye as if it were a platform problem, this happens a lot since it was decided to carry out transactions virtually now they can make their excuses for steal no problem. The truth is that many do not trust the banks, i have had very bad experiences, and less in the loans that they make, since in addition to the fact that the interests, are exuberant and increase every month, they use loans with collateral as a requirement, which in my opinion could bring anyone to ruin, that's why I prefer to take care of myself with them, i only use it for necessary things, because as an option to  save my money never... imagine it going bankrupt (goodbye to my efforts)... I prefer to invest it and save the earnings in virtual wallets I feel more secure with these.

the burdensome interest system seems to bind consumers to continue paying interest, just imagine that at the beginning of the installment the interest expense is greater than the principal, so that it can be said that at the beginning of the installment we only pay interest, and in the calculation the bank seems to take profit up front, therefore we have to be careful when dealing with the details of the installments, otherwise it will seem as if we have been cheated, but the bank can also make a solution with the capital they provide to start a business, but we also have to be observant in the calculations

And this is where the adoption of bitcoin  comes in, rather than leave your money with banks to enrich themselves  with it, and paid peanuts in form of interest a d also requiring  a whole bulk of documents when claiming your money, the option of investing in Bitcoin  should be the best as there are more possibilities of making more money if everything been equal and maket moves very fine.

There is a form known as the POD ( Payable on Death) form and I will strongly advice anyone who has some reasonable sum of money in the bank to always demand for this form  as this will save your family a whole lot of stress if one passes away else just buy bitcoin  and keep your seedprase in a safe and secure  place where it can be accessed in case of death.

Banks generate revenue in a variety of ways, but the most important is through the interest they collect on the loans they make. When a bank makes a loan to a consumer, that person must pay interest on the loan. This interest is normally calculated as a percentage of the loan amount and is paid to the bank on a regular (monthly or quarterly) basis. A bank's ability to charge interest on a loan is affected by a number of factors, including the type of loan, the borrower's creditworthiness, and the overall level of interest rates in the economy.

Investment operations are another way for banks to make revenue. Many banks have investment divisions that invest in a variety of assets including stocks, bonds, and real estate. The returns on these investments can provide the bank with a considerable stream of revenue.

Those are actually very ridiculous numbers.  So if I'm being charged 3% of the money I  received,  how much will I be charged for transferring that same amount of money?  It's also a very fraudulent act because usually, the person sending the money bears the transaction charges, which means the bank is charging twice for a particular transaction.
This is hard to believe.
I believe the bank can do this for their customers involved in illegal activities like money laundering, drugs, embezzled funds, and so on,  but to charge that kind of amount on honest people that make an honest living is absurd.  I know the banking institutions are dirty as fuck,  but I don't think they can openly do things like this and nothing would be don't about it. 

Most of the time, at least before the ridiculous inflation in the past couple years, banks were not particularly profitable and were mostly running on low margins, similar to supermarkets - where they made money from sheer volume of transactions instead of high profits from each one. Now though they are making lots more money between the amount they get in interest from the central bank and the tiny amounts they pay out to savers, while also able to easier hide profitable fees in growing mortgage rates.

People who believe in Bitcoin have started keeping their money in Bitcoin long ago but those who don't believe in it and are blind followers of these traditional financial institutions, will never be able to understand this and they will keep depositing their money in the banks whether they are being misused by the banks for personal gains or whatever they are doing, they believe that their money is safe with them so they rest assured.

On the other hand, banks and other financial institutions along with official government authorities are against Bitcoin for this sole reason because they know if all people start using Bitcoin and stop keeping their money at the banks, they will be doomed because they won't have any money in that case.

I see that reason why the government is really eager to stop the rise of crypto, that's include Bitcoin. knowing that if knowledge
increase about keeping your money in an encrypted wallet will keep your savings safer.

Just a good knowledge and the banking industry will be affected, for sure if large numbers of people start using this system
a collapse may take place.

Banking business runs around the save money of each end user, without any deposit it will break the cycles.

I don't think the major reason why the government  is fighting this is because of dominance, well I'm only speaking from my personal point of view especially  about my country and the reason I think the government  of my country  is fighting  Bitcoin  and cryptocurrency at large is to avoid  the several cases of untraceable scam transactions through bitcoin since bitcoin  transactions  can't be track.
I also got a popular  bitcoin  enthusiast in my country talking about bitcoin  and cryptocurrency  at large and he also explained and made me understand  that the government  of my country isn't fighting  these cryptocurrencies per say but what they're doing is avoiding been associated  with bitcoin  and anyone doing this, should  be doing it at their own risk without wanting the government  fight for them in case there is scam, fault or complications with the transactions.

Well, taking advantage of bitcoin's intrinsic anonymity is necessary. But, the question is why your government is doing it and the answer is that it's all to avoid unhealthy transactions, misuse and so on. that's why it's no wonder that regulations are tightened because they are unable to track bitcoin transactions.

My personal opinion is not the dominance that is seen there, but they want to know more about the technology that is in BTC and they only use their special rights to easily enter and monitor it.

Each individual is directly responsible for his own policies in buying and selling cryptocurrencies. Of course, because the government does not act as a representative issuing cryptocurrencies and the government is not a supervisor, everyone is responsible and bears their own risk when engaging in trading and investing in crypto. Agree with you that the government will not fight for and accept if there is fraud, error, or transactional complications and all other forms of risk because they are not the person in charge.


Yes, it's true that every government will definitely tighten its regulations as cryptocurrency grows and develops, this aims to maintain the stability of each country. I don't think this step is wrong, considering that the Government does not prohibit its citizens from investing in cryptocurrency in any form, regulations are tightened with good intentions, as you mentioned the goal is to avoid abuse and unhealthy transactions.

Banks to me are a high corrupted system at least in my country. Where Government gives them the authority to manipulate, steal, and use people's money without any investigation. When a bank goes bankrupt, it takes away all the money from the people who have accounts with them and without any refunds or repercussions for the bank.
I will give you a simple and known example for instance in my country, there was a politician who owned a bank. Many people invested their money in that bank trusting it with their savings for some annual returns. But one day that politician decided to steal all the money and escape to the United States, without facing any arrest or consequences. What's even more weird is that he was able to return months later as if nothing happened.

For this i don’t believe that banks generate money. Banks don't actually generate money instead they gain ownership over your money once you deposit it with them and use it as it’s their own money.

Another ironic thing about banks is how they are very strict when it comes to paying your credits on time and with the exact amount, but when they are the ones having problem (like system failure, loss of savings money due to their system being hacked and bankruptcy) you will have to wait for so long and most of the time they will not be accountable for your money.

Interesting, but the truth is that banks played a role in creating credit money, which makes up most of the money circulating in the modern economy. They just they make entries in the ledger. Easy example, if we submit a loan of $ 1,000 and if it is approved they will only add $ 1,000 to our account balance as credit money that we can use instead of bringing all the cash to us. So, where do the benefits come from? It is clear from the Interest on Loans submitted by customers, the easiest thing to see as what the OP said is their Service Fees and these fees are also a source of income and are involved in investment and trade and this is also part of the bank's income.

Every transaction related to banking will incur a fee because the Bank main goal is to print or generate income, usually conventional banks gain profits through two events, the first is spread-based income and the second is fee-based income. The simplest example is traders buying natural resources from the community or farmers and then selling them back to consumers, where do the profits come from?

The business run by the Bank is more or less like the example above. Banks use (collect) money from people who cannot yet use money or don't know how to use money, then the money that has been collected is used as loans to people who need money or companies. The Bank certainly charges a return fee (loan interest) depending on the percentage attached to the loan agreement.
Financial institutions are like parasites that slowly undermine the people, they set high interest rates on the borrowers of money and offer very little return for the people who save money there.

Makes you wish you owned your own bank right? Oh wait, that's what's bitcoin does! Now we just have to watch out for the bank robbers AKA scammers / con artists. I like how Gandalf says it best, "keep it secret, keep it safe"! And this is exactly what everyone needs to do with their PKs and wallets etc etc.

When it comes to money, banks are the real masterminds behind the scenes. I get your drift, but lets examine this more further. Obviously, their motivation is financial gain. Yes, but arent they all? To simply compare banks to traders is to miss the point entirely

Without banks, society might grind to a standstill due to the lack of necessary financial infrastructure. Their expertise lies in financial dealings such as loans and investments. Sure, companies make loans using depositors' money and earn interest that way, but isn't it preferable to keeping your money in a savings account at home?

Your next point is that they are parasites, which is fair. I find it a little severe. High loan rates are not created out of thin air, though. This is a strategic gamble. A bank is not a charity; it has to set aside money in case of losses. The rate of return on savings is another contentious issue. Bear in mind that with great power comes great responsibility.

The bank has a lot of profit in different ways.  Banks themselves are benefiting by earning high profits as well as providing many benefits to the people. But according to me bank generate most income from loan service and from credit/debit card and they have many other ways to generate income but customers don't suffer much for it. Everything is in one control and the bank and the customer all happily carry on with the transaction

I would just like to add that Banks, the big ones, are corrupt as all hell.  JP Morgan/Chase, Wells Fargo, Bank of America..the worlds largest banks, are all corrupt crooks. 

Take a look at JP Morgan / Chase fraud violation tracker.  Since the year 2000, JP Morgan has had nearly 40 BILLION in fraud violations...and yet no one ever goes to jail.

If you use a bank, get an online account (like Ally, Capital one etc  Bankrate.com is a great place to view best current interest rates).  Now you'll also need a physical bank for ATM use, I recommend credit unions and very small "mom and pop" type banks, which are fewer and far between these days..but these two types of banks are decently legit...big banks, anything but. 

This is nearly 20 years of financial experience closely working with banks, so not coming out of my ass.