Why don't banks reward existing customers?

williewonder

Banks have switch offers, wine offers for new customers, etc. Why don't banks have rewards for existing banking customers?

colsten

Quite a few do.

Santander: cashback
Natwest/RBS: Rewards
Halifax: Rewards
Lloyds: Rewards, interest, better savings rate
Barclays: Rewards
TSB: cashback
BoS: interest
Virgin Money: interest

EDIT: Natwest, RBS, Ulster, Santander, Halifax, Yorkshire Bank switch offers were all available for existing customers, too.

vacheron

Banks will reward new customers with the "big" incentives because many customers will stay with that bank for quite a long time, (or possibly even forever), Without the bank having to lift a finger to keep them.

Same with broadband, car insurance and everything else.

I have my £180 worth of Virgin wine sitting happily in my wine cooler as I type, it took me all of about 20 minutes work to get it, but I'd need to leave £36K in their savings account for 12 months to earn the same amount year while inflation erodes said 36K to the tune of almost £550 so I'll be off on the move again once the dust has settled, but many will not.

colsten

vacheron said:

Banks will reward new customers with the "big" incentives because many customers will stay with that bank for quite a long time, (or possibly even forever), Without the bank having to lift a finger to keep them.

Same with broadband, car insurance and everything else.

I have my £180 worth of Virgin wine sitting happily in my wine cooler as I type, it took me all of about 20 minutes work to get it, but I'd need to leave £36K in their savings account for 12 months to earn the same amount year while inflation erodes said 36K to the tune of almost £550 so I'll be off on the move again once the dust has settled, but many will not.

In many cases, it's not an 'either' 'or' decision because you often can have both, the joining incentive and the ongoing reward (except, you could not realistically get 2% on £36k at Virgin). Plus, the joining incentives are now almost always one-offs, so over time, the ongoing rewards can represent quite good value for money.

[Deleted User]

I do think it's sad that there has been a break down between customer and bank on a personal level. Now you have to be rich to speak to someone local on a regular basis. You notice a lot of these digital banks trying to make you feel special or part of something. You are of little interest to banks unless they can make money from you. And that is peanuts for most people, in the mind of the bank.

vacheron

colsten said:

vacheron said:

Banks will reward new customers with the "big" incentives because many customers will stay with that bank for quite a long time, (or possibly even forever), Without the bank having to lift a finger to keep them.

Same with broadband, car insurance and everything else.

I have my £180 worth of Virgin wine sitting happily in my wine cooler as I type, it took me all of about 20 minutes work to get it, but I'd need to leave £36K in their savings account for 12 months to earn the same amount year while inflation erodes said 36K to the tune of almost £550 so I'll be off on the move again once the dust has settled, but many will not.

In many cases, it's not an 'either' 'or' decision because you often can have both, the joining incentive and the ongoing reward (except, you could not realistically get 2% on £36k at Virgin). Plus, the joining incentives are now almost always one-offs, so over time, the ongoing rewards can represent quite good value for money.

Yes, The 2% is just on £1K in the current account (£1.66 per month, really, what's is the point?) ;P So I calculated the £36K using their linked 0.5% savings account they make you open as part of the wine offer pre-requisites.

I used to have the Santander 123 which gave you £50 interest for £2 per month. Now they give you £5 interest for £4 per month.

The rewards definitely seem better value than higher APR accounts with tiny upper limit caps. 

I got the Natwest £150 switch and the ongoing rewards are OK.

I have to keep a Barclays account, and their ongoing Blue Rewards are pretty good, They were giving me £42 per month at one point (£45 with a £3 fee), but this has dropped back to £8 per month now (£12 with a £4 fee).
The premier rewards Barclays had were OK too, but they have closed that completely now with no replacement (if there will be any) yet announced. 

tacpot12

It is very expensive being a bank (due to the cost of staff, IT and regulations), and with interest rates being so low, there is much less scope for banks to make a profit from money that is passing through them, so they can't be as generous to customers as they could in the past. Retail banking customer in the UK get free banking, which is almost unheard of in the rest of the world. So if, as an existing customer, you are getting an ok service from your bank for free, you are actually being rewarded pretty well. All the Reward schemes only return a small fraction of the profit that you make for the bank. If you want more 'reward', buy shares in your bank.

eskbanker

Deleted_User said:

You are of little interest to banks unless they can make money from you.

You are of little interest to any commercial organisation unless they can make money out of you, even if some hide it better than others.

Welcome to capitalism....

MovingForwards

Virgin also offer discounted experiences and other things if you poke around the app. They also have useful interest rates.

I have a reward account and earn £5 a month (less £2 fee) just by doing what I normally do, plus the option of earning additional rewards.

colsten

Deleted_User said:

I do think it's sad that there has been a break down between customer and bank on a personal level. Now you have to be rich to speak to someone local on a regular basis. You notice a lot of these digital banks trying to make you feel special or part of something. You are of little interest to banks unless they can make money from you. And that is peanuts for most people, in the mind of the bank.

If speaking to a person is important to you, you could use First Direct, as they are still providing telephone support.

Though I am intrigued - what do you want to speak to someone in a bank about on a regular basis? Why do you think banks ever had anything other than making profits in mind?

fenwick458

I think the handing out of offers to "new customers" is going to be under review soon, banks probably seem to think they will get away with dishing it out to these "new customers only" for a bit longer yet, and probably seem to think that by offering it to existing customers too they will just be seen to be "taking the !!!!!!"
the way I see it, (and it's complete conjecture and speculation) is that the people who organise these switch offers have absolutely nothing to lose, and only customers to gain. I don't know, maybe the money is drawn from a shareholder dividend pot, and theres no way it can cost them money? yet they might stand to gain bonuses from somewhere if they get x amount of new customers to sign up? They seem to be making the offers easier and easier to claim, for example a few years back you had to actually use the account and move a certain number of DD's, now it seems like you can just open one and get the bonus, and then you can close it...or switch again...