Saving and Borrowing
Let us start at the beginning...
Today's banking sector stemmed from the "good old days" in times of gold or silver before we had cash. People found it difficult to transport their assets, mainly due to theft. They could leave their precious goods with a vault owner.
The asset owner would rent a "safe" place to store valuable assets in receipt of a promise to return, or for a better term, promissory note and customers would pay a fee for this service.
The vault owners quickly learned that their customers would deposit the assets, and instead of collecting when they were required to pay for other goods and services, they started to trade the paper ( I.O.U's ), "the bearer" of the note could redeem at the vault for gold. This is now known today as cash in a gold-backed banking system.
Some smart cookie, theoretically the first bank, with their customers' agreement, began to lend out these IOU's ( backed by the customers gold in their vault ). The borrower would pay interest on the amount, which was split with the asset owner.
Sound familiar? Lets us now move forward to today.
So we did...
...and what we found is rather shocking! Rude, in fact. On average, our lovely high street banks keep 97.5% of the profit from lending out our money.