Case insensitive passwords is entirely a business decision. Banking websites in particular have huge numbers of non tech savvy customers. When they forget their password or type it in incorrectly, they don't go to the password reset form, they call into customer support. This costs an enormous amount of money.
Banks figured the cost of reimbursing people if their account is compromised is lower than the cost of having to field all of those phone calls.
Source: Used to work at a bank.
