How does a bank make money?
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The Secret: How does a bank profit from your 'free' checking account?
It lends your deposits out at a higher rate than it pays you. Deposits are cheap funding. The gap between what banks pay depositors and earn on loans, the net interest margin, is the core engine, with overdraft fees on top. Source: Wikipedia – Net interest margin
Why They Stay: Why do people stay with a bank they don't love?
Moving paychecks, autopays and cards is a chore. Switching means redoing direct deposits, bill pays and saved cards. Federal Reserve research finds those switching costs let banks pay less on deposits than they otherwise would. Source: Federal Reserve – Consumer Switching Costs and Firm Pricing: Bank Deposit Accounts (FEDS 2008-32)
Why They Leave: What triggers a switch?
A surprise fee, especially an overdraft. Fee shocks are the classic trigger. The CFPB has documented how much some banks rely on overdraft and NSF fees. Source: CFPB – Overdraft and NSF fees