Airport lounges are a nice perk, but bank customers really care only about rates

The easiest way for a bank to keep down its costs of acquiring new deposits is to keep its existing customers. The customers you have are cheaper than the customers you need to go find. But keeping those customers is not itself costless. Once you’ve gotten a customer, you have to keep them. And to keep them, you need to provide a certain level of service.

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Bank-run airport lounges outrate airline-run ones, according to a survey of consumers, our Melinda Lucy reported. If you’ve been on a plane lately, perhaps this isn’t such a shock, but it is interesting that banks see this service as more valuable than the airlines do, and are putting more into it.

Some, such as American Express, have been running airport lounges for years. In other cases, it’s the newbies who see the value in it. Both Revolut and Nubank have gotten into the game lately. In Revolut’s case it just announced it’ll be opening up its first next year.

This is all of a piece with the revival of the branch model that we’ve written about a few times recently. Banks have been on net opening more branches than they’ve been closing. Is it working? It’s hard to tell from the outside, but I do know that I actually got a pitch from a PR agency this week trying to make the argument that the resurgence of the branch is not a sign that digital has failed.

So at least the digital people see this happening and feel like they have to respond to it. That’s a level of success, for sure.

I don’t know for sure that the proverbial sleepy deposits are any less sleepy. I do feel like there is a rising level of competition, if only as a result of the proliferation of new products and services. But how real is that competition? 94% of depositors leave their money sitting in a bank account, regardless of the options they have for it. That doesn’t sound like disgruntled customers, or even customers looking for a better deal.

The tension comes from the importance of these “sleepy deposits” set against the odds they may wake up. Fully 60% of bank profits are based on exactly these depositors, the ones who never leave. That’s a lot. Keeping them, therefore, is paramount.

That’s why banks are opening branches, running airport lounges, and even investigating and investing in building out their own stablecoin networks or tokenized deposits. Of course, the biggest issue in all of this is interest rates, and that is something that is out of the banks’ control. Looking at rates this morning, the 10-year Treasury note and 30-year bond remain very close to their recent highs, which are also multi-decade highs. 

The one person on the planet, in fact, who has the most individual control over that just so happens to be speaking today in Jackson Hole, Wyoming, as our Ebrima Santos Sanneh reports. The chairman’s speech at the Federal Reserve’s annual symposium has been a place where the chairs have sometimes outlined their big, bold, headline strategies.

But Chair Kevin Warsh has made a point of being less talkative than his predecessors so it’s unclear if he’s got a big speech planned, or just a speech. That Cheshire Cat act may not work so well with a market as nervous as this one. Warsh was scheduled to start speaking at 8 a.m. mountain time.