Why do banks still hold deposits when everything is done digitally?

Oh, quit complaining, jump into the jalopy and I'll drive you into town to the bank. Don't forget your passbook.








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It's a bank... While you're waiting for the deposit to be cleared they're busy lending it out to someone at several percentage points above what they're paying you... Along with a hundred thousand other people's deposits to boot

Because in the intervening time the bank can make money out of it.  In fact, while they hold it, they can legally lend about 10 times that amount.

No big deal for one account.  But multiply that by millions and you have a nice little earner for them.  Which you pay for.  :)

Everything is not done digitally.  But the answer is because they can.  The government decides what percentage of deposits must be readily available for withdrawal.  Every cent over that has to be earning in some capacity (in the bank's mind).  If they hold your $75,000 for 10-14 days that benefits them.  Otherwise you might start spending that or transfer it on to a MM right away. This post was edited by Thriftymaid at January 8, 2017 8:42 PM MST

True and not true. Banks still run a fair volume of overnight, weekly, and monthly (mostly loan and mortgage) batch processing on mainframes. So, while front end systems appear to be real time, back end systems are not. This can also protect you (and the bank) from fraud.