[itsoktocry]

>How can a business model rely on this?

Customers also want to earn easy, high interest, that's the main issue. You're taking a risk (albeit a small one) with your deposits; your money is being lent by the bank and they pay you interest in return.

If you only want your cash to be held safely, put it in a safety deposit box.

[notmindthegap]

How many people are actually parking their money at a bank to earn high interest? My guess is for most, the safety deposit box is their bank account.

[icegreentea2]

Don't want to move the goalposts, but I think it's more accurate to say that most people (and companies) park their money in banks with the following expectations:

* It's easily and quickly available

* The number only goes smaller when the account owner authorizes it for stuff the account owner wants to spend money on

* The account owner does not have to think about any of the actual logistics of making the above

Naturally, these are in tension - it costs money to make all of this happen. And since people want the number in the account to not go down (through fees or whatever), then 'naturally' the bank needs to make $$$ somehow.

The flip side of your original question about "business model" validity is that the business model is heavily subsidized by the state and overall society because this particular business model generates a lot of liquidity, which is generally believed to be net beneficial for governments, societies and countries.

In effect, this entire business model and all the regulation and laws and structures put in place are attempting to systemically will into being a high-trust environment. The possible downsides of this system more or less scale with the size of the gap between the actual underlying society, and the degree of trust implied by the system.

[macinjosh]

Give me a break, no one is getting high interest returns from their cash savings account. A pittance is given to savers so banks cause my money for lending. Yet, when I want to borrow money from the bank on their credit card the interest rate is in the double digit percentages.

[ec109685]

Precisely: “At the end of 2022, SIVB only offered 0.60% more on deposits than its peers as compensation for the risks illustrated below; in 2021 this premium was 0.04%.”

[mixdup]

a safety deposit box is not safe by a long shot. if the bank burns down you're screwed. safety is the $250k FDIC limit, period