How do banks mediate between those who have surplus money and those who need money?

People with surplus money deposit their money in banks into savings accounts or fixed deposits. Banks keep only a small proportion of their deposits as cash with themselves. They use the major portion of the deposits to extend loans. There is a huge demand for loans for various economic activities. In this way, banks mediate between those who have surplus funds (the depositors) and those who are in need of these funds (the borrowers).