Professor Philip Lane:

Traditionally, banks would have gathered deposits and made loans. Those loans would be a source of income because they would receive the interest payments from the debtor. That is how a bank would earn income. However, an alternative strategy came to be developed as follows. Let us say I have 10,000 mortgages. I will write a contract which says that I will issue a bond where the pooled income from those mortgages will form the basis for making the interest payments on that bond. If you issue that bond, you no longer worry about those 10,000 mortgages because-----