I never learned how it works
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Originally (like, Roman times) You would pay a fee for banking services, which were highly valuable. When you give the bank your money they take over keeping it secure, and you have the ability to take money out in a completely different location without having to hire a person to physically move the money!
You can still buy this type of service, if you wish. It is basically how safety deposit boxes work. The items (such as cash) you give them are stored securely and you pay for that service.
However, modern banking generally works differently. Think of this from a Bank’s perspective. 10 people each deposit 100$. You are holding 1000$ in deposits. On any given day, 0-200$ of new money is deposited, and 0-200$ of deposited money is withdrawn.
Instead of keeping all 1000$ in cash in a hole in the ground, you can keep only 200$ to cover regular withdrawals, and invest the other 800$. Lets say you make 5% interest. You can then pass along that 4% return to your customers, keeping 1% for yourself for managing the entire situation!
This is what is done in pretty much all banking. Thus, the business works like this.
An illustrative example:
**HOLE IN THE GROUND:**
X$ Deposit
-1% – Cost of security
TOTAL : 1% from depositor to bank for services
**Invested Funds:**
X$ Deposit
-1% – Cost of Security
0.2X – Held as Cash for Withdrawals
0.8X Invested at 5% = +4% Return
25% Fee on Investment returns for managing investments: -1%
TOTAL: 2% from bank to depositor.
Of course, these numbers fluctuate. For modern times, banking can be paid for by the value the bank realizes just holding the money, with some left over to return to savers. Sometimes though, if investment returns are particularly low or if costs are particularly high, you will see banking services which have a net cost to depositors.
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