It's the same model BUT they don't get anywhere near enough money from deposits to cover loans. So they bundle them up turn it into a "bond" and sell it to va

It's the same model BUT they don't get anywhere near enough money from deposits to cover loans. So they bundle them up turn it into a "bond" and sell it to various clients (pension funds, high net worth individuals, hedge funds etc). That's why they're not willing to pay more than 0.5% to depositors: You can do one deal to fund 100mil in lending with a hedge fund for 3%, or you can offer 3% to depositors, then spend another 3% employing staff and opening branches for those accounts, and when there is a downturn they all withdraw their cash and your bank fails. That, and for (say) auto loans, you need to withhold a chunk of money to cover defaults.