Why don't banks reward existing customers?

Ballard

jbrassy said:

Ballard said:

How much money do you think that a bank earns from having a customer with an average £2,000 balance?
Most high street banks offer a debit card where the account holder can withdraw funds from many ATMs for free, a chequebook, use of internet/phone/app banking and often postal statements and advices. Don't get me wrong, this isn't a cry for sympathy for banks (they don't deserve it) but just one for a reality check.

They do earn interchange fees every time someone uses their debit card to make a purchase, which is the main source of financing for a lot of these newer app-based banks, such as Starling and Monzo.

However, a lot of people think about current accounts in the wrong way. Banks don't operate current accounts to earn revenue or make significant profits. They use current accounts as a cheap source of financing. The majority of current accounts pay zero interest on balances. Therefore, they can use current account balances as a cheap source of finance to earn revenue from other activities such as loans and mortgages from which they make a healthy margin. Effectively, current accounts cross-subsidise other products that banks offer.

There's an understandable misunderstanding with using one customers funds to lend to another. They can't simply use the balance in my account to lend to someone else as they need to stay liquid in the event that I decide to withdraw it. Each bank is assigned a percentage of current account funds that they will only be able to lend in the interbank overnight market (which pays pretty much nothing at the moment) or lodge with the BOE. I have no idea what that percentage would be because it's not in the public domain but I'd suggest that banks can lend a much smaller percentage of current account balances to other customers than is expected. The way that they do use retail funds is via fixed or notice deposits which, of course, pay interest.

vacheron

Deleted_User said:

Deleted_User said:

colsten said:

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?

Just the small things, when you used to visit a branch before internet banking and the like, you got to know the people on the counter, small talk etc.

Of course banks want to make money from you, but the people on the counter never used to be tied to targets or be as forceful in pushing products at one time, long ago. In terms of applications, they used to have more leeway in making decisions, taking in personal circumstances.

It's funny, hundreds of thousands of people have, apparently vivid, memories of staff pushing PPI on them even though they "didn't want or need it". Obviously that's a lie based on CMC scripts but it did still happen. Even in the good old days with rose tinted specs, some bank staff were pushed to make sales of stuff like that

I remember on the rare occasions I had to go into my Barclays branch 10-15 years ago to do any banking transactions that couldn't be done online for whatever reason, they always seemed to require the input of a "senior advisor" in one of their little glass side cubicles, and that "friendly, personal service" small talk invariably ended with them trying push a number of their highly uncompetitive products and services on to me.

I've managed to survive quite happily without that for the last decade thanks. :-) 

colsten

callum9999 said:

colsten said:

callum9999 said:

colsten said:

callum9999 said:

colsten said:

callum9999 said:

colsten said:

Why do people explain why banks don't offer rewards to existing customers, when in the very thread there is a list of the rewards banks do offer to existing customers?

Because the list you produced is full of trivial rewards in comparison to the new customer switching bonuses? 

I know they're virtually useless to me... I have accounts with almost all of them but hardly use any of the things you mention.

I don‘t, for example, consider £60 per year per account trivial. Nor do I consider 2% interest as trivial. But each to their own. The fewer people chase those rewards, the longer they will probably exist.

Does the 2% refer to Virgin? Capped at £1k, making it £20 per year - which you think is in the same league as a £150 sign up bonus!?

Thanks for reminding me, though, I am very aware that the interest for VM current accounts is capped at a £1k balance per account. 'nuff said.

Huh? So you're claiming that a £20 yearly interest payment which can end any time (and surely will once Virgin are happy with the number of accounts opened), is just as good as a £150 up front joining bonus? Weird.

Please stop putting words into my mouth.

How about you use your own words then instead of just saying "nuff said" and leaving me to figure it out!

I said that most of the things you described were trivial in comparison to the £150 switching bonuses, and you replied saying 2% interest (which you say you knew was capped at £20/year and can be withdrawn at any time) wasn't. I really don't know how else I'm meant to interpret that?

(Perhaps your £60 was a better example and you misspoke when bringing up the 2%? I ignored that bit as I don't know what the £60 refers to!)

This thread doesn't offer itself to educate you in detail about the offers available in from the various banks. Like everyone, you can look them up yourself on the respective websites, and/or locate the MSE discussion threads about the various offers.

As my passing comment on this conversation with you: I have never said you aren't entitled to consider £60 per account per year, or 2% interest per account on capped balances etc, as trivial. I hope you possess the courtesy to allow me to consider them as non-trivial.

callum9999

colsten said:

callum9999 said:

colsten said:

callum9999 said:

colsten said:

callum9999 said:

colsten said:

callum9999 said:

colsten said:

Why do people explain why banks don't offer rewards to existing customers, when in the very thread there is a list of the rewards banks do offer to existing customers?

Because the list you produced is full of trivial rewards in comparison to the new customer switching bonuses? 

I know they're virtually useless to me... I have accounts with almost all of them but hardly use any of the things you mention.

I don‘t, for example, consider £60 per year per account trivial. Nor do I consider 2% interest as trivial. But each to their own. The fewer people chase those rewards, the longer they will probably exist.

Does the 2% refer to Virgin? Capped at £1k, making it £20 per year - which you think is in the same league as a £150 sign up bonus!?

Thanks for reminding me, though, I am very aware that the interest for VM current accounts is capped at a £1k balance per account. 'nuff said.

Huh? So you're claiming that a £20 yearly interest payment which can end any time (and surely will once Virgin are happy with the number of accounts opened), is just as good as a £150 up front joining bonus? Weird.

Please stop putting words into my mouth.

How about you use your own words then instead of just saying "nuff said" and leaving me to figure it out!

I said that most of the things you described were trivial in comparison to the £150 switching bonuses, and you replied saying 2% interest (which you say you knew was capped at £20/year and can be withdrawn at any time) wasn't. I really don't know how else I'm meant to interpret that?

(Perhaps your £60 was a better example and you misspoke when bringing up the 2%? I ignored that bit as I don't know what the £60 refers to!)

This thread doesn't offer itself to educate you in detail about the offers available in from the various banks. Like everyone, you can look them up yourself on the respective websites, and/or locate the MSE discussion threads about the various offers.

As my passing comment on this conversation with you: I have never said you aren't entitled to consider £60 per account per year, or 2% interest per account on capped balances etc, as trivial. I hope you possess the courtesy to allow me to consider them as non-trivial.

An interesting objection given your personal obsession with educating people in detail about said offers, posting about it and then getting stroppy and reposting about it when everyone ignored it!

This is clearly an ego thing, I'll give you the courtesy of not interacting with any of your posts in the future.

MalMonroe

I always worry about people who suffer from alcoholism when offers are things like cartons of multiple bottles of wine. How do they cope? And for me, I only drink alcohol at Christmas - one small sherry, please. I wouldn't know what to do with all that booze. It's really unfair on we who don't drink or like alcohol and also on those who can't resist alcohol. 

I'm not bothered about incentives to switch current accounts because the ones I've looked at all usually have conditions like you have to put at least £1k in your account every month or pay £5 per month for the privilege of having an account at their superior bank. When you're poor they're not much good.

People pay for their 'gifts' - just in different ways. 

vacheron

MalMonroe said:

I always worry about people who suffer from alcoholism when offers are things like cartons of multiple bottles of wine. How do they cope? And for me, I only drink alcohol at Christmas - one small sherry, please. I wouldn't know what to do with all that booze. It's really unfair on we who don't drink or like alcohol and also on those who can't resist alcohol. 

I'm not bothered about incentives to switch current accounts because the ones I've looked at all usually have conditions like you have to put at least £1k in your account every month or pay £5 per month for the privilege of having an account at their superior bank. When you're poor they're not much good.

People pay for their 'gifts' - just in different ways. 

There is an alcohol free alternative offered, but IIRC it is only worth £79.  

If I suffered from alcoholism (or abstained on personal or religious grounds) the simple approach would be to take that option, or select a different bank offering a cash incentive instead. 

This one has no fee and no minimum monthly requirement, just 2 direct debits and £1k in the savings account (but this is only for a few days until the wine code arrives) and then you can take it out again. 

adamp87

The reason they don’t is they offer free accounts. Yes you can get more advanced accounts but they cost you a little.

If you think where else is the average person going to put their money? Another bank. And they anticipate people will move banks occasionally that’s why the incentives exist.

It’s not free money because they make money from your own money and offering you products.

https://www.statista.com/statistics/466271/uk-banking-length-time-use-main-account/

2015 but probably relevant, this suggests most people have a main bank account with a provider for 10-20+ years (57% of respondents).

Whilst on this board and deal websites people have countless accounts for switch incentives and such, the average person probably doesn’t.

Eco_Miser

MalMonroe said:

I'm not bothered about incentives to switch current accounts because the ones I've looked at all usually have conditions like you have to put at least £1k in your account every month or pay £5 per month for the privilege of having an account at their superior bank. When you're poor they're not much good.

People pay for their 'gifts' - just in different ways. 

Paying in  £1k a month could be done by paying in £50 on each of the 20 working days of each month, by faster payment from another account, (and then moving it back the same way). Not a great capital requirement.

The banks I'm aware of that charge a small monthly fee either waive it when you meet a condition or offer cashback which more than covers the fee (if it doesn't that's not the right account for you).

I wonder how I'm paying for my gifts - it's not by being cross-sold any products, nor by paying fees or overdraft interest.