Why do banks pay their customers interest money in their savings accounts?

Banks pay interest on savings accounts to incentivize customers to deposit their money with them, allowing the bank to use those funds for loans and other investments. This practice helps banks manage their liquidity and maintain a stable source of capital. Additionally, offering interest helps attract and retain customers in a competitive financial market. Ultimately, the interest paid is a cost for the bank but is offset by the potential returns from using the deposited funds.