My guess is that getting a full 6-8%+ return with less customers is more profit than retaining customers by offering 4% and making 2-4%.

Small banks are happy to offer 5% right now though. Bank of america and chase are offering essentially 0% which are the 2 biggest banks. Cba googling more.

Greed. They think lending out less for the full 100% of revenue is more profitable than increasing customers/deposits while doing revenue-expenses. And they are probably right for now. Chase in the US pays 0.01% lol

All the small banks here are offering 5% to get new customers from the giants. For retail and business though, its way less effort to just stick it in a broker you already have set up offering 4.x% instead of opening with a smaller bank. Almost every1 of us here has either a fidelity, ibkr, or even robinhood acc they use and those 3 are offering 4+%.

Money markets. Even retail is pulling out. Why keep money in bank for 0.02% interest when fidelity will automatically put any unused cash in their 4% yield money maket. Other brokers offering similar.