What is the Business Model of a Bank?

What is the Business Model of a Bank? What is the business model of a bank? This question is very important when it comes to understanding how banks work. The business model of a bank helps explain how banks make money, run their services, and help their customers. Banks are a key part of the economy, acting as middlemen between people who save money and people who borrow it. They also offer many different services. Knowing how banks make money helps us understand how they operate. Also, looking at how they earn profits shows the ways they keep their finances healthy. What is the Business Model of a Bank? Main Ways Banks Make Money Banks mostly make money in the following ways: Interest Income: Banks lend money to people, businesses, and governments at higher interest rates than they pay to people who deposit money. The difference between what banks earn from lending money and what they pay on deposits is called the net interest margin. Fees and Charges: Banks charge fees for things li...