Topic: Banks are a business, and you are the cash cow (Read 450 times)

Banks are financial institutions that play an important role in allocating funds from parties who have excess funds to parties who need funds, as well as facilitating financial transactions between these parties. Banks benefit from the difference between the interest they pay customers who save and the interest they receive from those who borrow money.

Although banks benefit from this interest difference, they also bear the risk of lending and managing their customers' funds. Banks also have a responsibility to comply with regulations set by regulators, such as central banks, to ensure the security and stability of the financial system.

This is the same as loan shark practices carried out by individuals who are not registered and are not regulated by financial authorities, which are often against the law and can cause losses to borrowers. Moneylenders often charge unjustly high interest rates, and may use violence or threats to force borrowers to pay back their money.

Although banks and moneylenders both benefit from interest, banks have regulations and responsibilities to maintain the security and stability of the financial system, while moneylenders often engage in illegal and unfair practices. Therefore, even though we do not like Business Bank because as a cash cow, we are forced to use it. But between the two it is better to use official banking services regulated by financial authorities to be protected by the government.

To be clear, for every $1,000,000 you bank receives in deposits, they are required to keep 10% of it in reserves and have $900,000 to play with in loans to other customers. The banks can recreate this with all customers creating loan amounts from thin air while the balance sheet of the customers remain unchanged.

Some economic boom could create a situation where more people are borrowing than they are depositing, any change in this would create a bank run and their sheets would be unbalanced like it was in 2008, and then they get bailed out with more money from thin air.

- Jay -

Yes you may be right but running a bank is as difficult as it gets!  It is also easy to earn huge amount of money from there. Because the banks spend their own money only to keep collateral in the central bank.  And all other expenses are paid from the customer's  deposit.  So in this case the bank does not have to do business with their own money. And even though banks pay some percent interest to their customers, they earn huge profits. Again they often charge unfair charges from their customers sometime. so You can't say that banks never charge sometime unfair from the customer's 

MSN: "Banks know how to leverage money in genius ways"? LOL!

This genius way is called Fractional Reserve Banking. The theory that for every $1 your bank receives, you can lend out $10 more as long as you keep that $1 in the vault. Lets scale that figure up...
For every $1,000,000 your bank receives in deposits, you can do business with $10,000,000
Lets scale it up again...
For every $100,000,000,000 ($100 billion) you can lend out $1 trillion.

It's not rocket science. If you lend out the same money 10 times, you only need one person to repay in order to break even. For everyone that pays after that, you are literally multiplying money!

At least on paper...because the 10x that was lent was not really money in circulation to begin with. It's fugazi (made up!)

A better way of explaining it, from SoFi (Go here to read more)

Banks most of the time help people by keeping thousands of crores of people's money safe under them and the customer can withdraw it whenever they want.  Also if one does FD then he is also given 5-7% interest so it is normal that bank will charge compound interest from the person to whom they lend because they don't enjoy this interest alone they give almost 50% to their FD holders. On the other hand, a bank has to collateral of Billion of doller the central bank.  And they incur a lot of expenses including staff salaries and various other maintenance costs. So I don't think a bank has  too many unfair charges

I mean, most of the people know this already. It's just that it's difficult for most of the people to go against the norm since mass adoption of bitcoin or any crypto currency hasn't been that huge yet. Which is why most of the people that are aware just use fiat and bank services for the sake of convenience and are already preparing themselves for the future when the crypto currency industry gets even more widely known all throughout the world. Most of these guys prepare by informing family and other important people around them while also learning and collecting as much good crypto as they can.

Still though, there are quite a lot of people who are already aware but still choose to ignore and do nothing about what they know and just take the opportunities that this industry has to offer not just for today but for the coming years as well for granted instead of taking advantage of them. Which is kind of sad in my opinion but oh well.

I do agree that banks are still a requirement for many things unfortunately and that's true, there is nothing wrong with that and I could understand it. However, when it comes down to a situation where it is between crypto or fiat, I prefer crypto obviously and even compared to gold or real estate, my number one investment is always bitcoin, I love it more than anything else.

But that doesn't mean that I need other investments for other purposes sometimes, like I have some gold, and I have my own house as real estate investment because I rather not pay rent. Obviously all of that slashed nowadays because of some economic stuff, and I have nothing now, but that's how I do it.

They are well aware of what the rules were and they use it as an advantage to make more money with people's money who use
their services, Bank owners are business professionals that's for sure!

We can expect them to make more money just by providing services, two-way business where they are receiving and keeping your savings
while using it with their investment ventures.

Nothing we can do about being a cash cow as it was professionally and legally being done!

even though we know the bank feels like a cash cow, but we cannot do what we want and of course we have to follow their rules, and we cannot be separated from the bank, especially if we are businessmen, of course there will be many transactions from our colleagues to expedite the business we have, but we can respond by knowing the nature of the bank. banks are not the best place to save, but we need banks to make money from our jobs, I think so

Most of the bank owners are the richest people in the world, or if there is a rich person then he also has banks, this is because banks are managed professionally and always apply strict policies, banks run business with legal support so whatever the banks do it will be difficult to stop.

To be honest, they are not considered a problem by a large, or the largest part of the human population, and that is because they fulfill the needs of almost everyone when it comes to managing, storing, or using their finances though it costs them money, they seem to have no other option but to use their services and products.

The process might be time-consuming, they might charge fees, and you may have to submit a whole lot of documents to get a simple thing done, but at the end of the day, they are the only ones that will do the work you need to be done, so we have no option other than to become cash cows for their business.

It is true that depositors are the cash cows & banks use their funds to generate profits, but this is how banking business model works, and it enables them to provide various services to individuals and businesses. They also provide facilities of saving accounts, credit cards and fixed deposits which can benefit us if we use them wisely. Banks play crucial role for the economy, as they facilitate transactions and provide credit.

The main issue with current banking system is that money consistently loses its value despite earning interest on saving as banking system operates on fiat currencies which experience consistent depreciation due to rising inflation. Bitcoin is the best potential alternative to address issue of inflation as it has limited supply.

Banks are often detrimental to consumers, if we lose money without our knowledge and we want to complain then we won't be able to return it, it's time for us to leave the bank because they only use the money we keep in the bank to get big profits for them.

That's how a bank works and that's why I'm using crypto right now not storing a lot of money in my bank but instead storing it in Bitcoin as an investment value and buying some real properties instead. But if I'm not using a bank I will get some trouble making transactions in my country since not a lot of people accept cryptocurrencies as a payment.

Not only banks but the whole system in this world works in a way to milk you.
Imagine, you work and half of your salary is gone into taxes. Additionally, inflation adds another tax to your salary and again your actual salary is still lower. And seems it's not enough for the government, everything you buy, every service you use, absolutely everything is taxed, this again deducts some % to your salary. And as a bonus, big companies have very high profit margins.
Finally, I would say that probably 70% of your salary is gone and taken by government, every 7 hours work out of ten is done for the government for free.

It's very sad how banks earn up to 3% from our transactions, they make money out of thin air. And bitcoin is not a deal if we have to convert bitcoin into USDs on exchanges, hope time will come when we will count things in bitcoin or in any other competitive altcoin.

Do you believe banks will continue to operate if they do not make a profit?
They make money in a variety of ways, as you mentioned in the OP.
I believe that the government receives too much revenue from banks and takes loans from them, which is why they always support them in collecting our money for their business and the sake of their loans, whereas if banks fail today, the government may overlook its citizens because I am sure that our big politicians and some of our government officials have large stakes in the banks, which will cause them not to fight for us when the need arises.

Banks will only value you when you come to deposit money because they know you have come with money for them to move up their business; when you come to withdraw your own money, they will now be very strict by following different due processes, which are always annoying. For this reason, someone may prefer to keep his money at home to avoid all of these banks' withdrawal problems, whereas the wise will invest it in Bitcoin and be completely free of any third-party and government policies.

Banks are indeed a problem at the moment, we are too dependent on banks so that when we deposit money there will be many rules, and if we want to take it then it takes a long process and time, if we borrow from banks and are late then large fines will be applied, but if we are on time or before due they just say thank you.

No matter what happens in business, once we become a customer, we are automatically a cash cow, which means that banks are not the only business that exists in this industry.

As simple as that, if there are no customers, the business is useless. Since the bank is a business, it's not surprising anymore, it depends on whether you trust the bank you put your money in them because that means you don't trust that you are the one holding the money to save so you entrust it to others so you don't spend money. That's what is seen in the aspect of the bank, the only unfair thing is that you entrusted them with your money that is not their money, what kind of requirements do they ask of us before we can get the money that we entrusted to them? That's why it's better to save bitcoin than to put money in the bank in my opinion.

But the truth is that you, I and all of us are still using the bank every day, and it will never be lost or replaced. Bitcoin is an alternative, but it is highly volatile and relatively new, its future is still a question, meaning that holding all assets in bitcoin is also risky, it is also unsafe absolute. All have different risks and benefits, nothing is perfect.
After all, you invest in bitcoin for money, you do business for money, then banks like us, they need money to live, and if you are not satisfied with their service, you just ignore it and don't use them.

For me, there is no problem with both, I use the bank to save and don't put too much money in it. Bitcoin is used to invest and accumulate assets to avoid future inflation.

It depends on the character of the person, but a responsible person will always feel the pressure of debt, and will also need to worry about paying all payments on time. I do not like this, and even more so, when I see what high interest the bank wants to receive for this loan, I lose any desire to take money from the bank. Probably everyone understands this, but sometimes there are moments when this is the last chance for a person to find money.