Why do French banks push hard that customers open a savings account?
In France account managers often offer their costumers that they open a savings account (Livret A as they call) on top of the checking account. From my point of view, those employees seem to have pressure in doing so, since they will ask that every time you meet them if you don't have. The banks even offer gifts to those who do. Given that it does not appear that they will have any chance to recover the money they spend to get customers to open these accounts (there are no fees and they have to pay out the interests, even if very small), why do banks have any interest of offering that? Does the balance on savings accounts in France is subject to different regulations than that on checking accounts, thus they can make more money like that?
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I don't think this is a French thing. It's like this everywhere. Banks always want people to open accounts of every type. A person with a checking account should be easy to sell on a savings account at the same institution.
Given that it does not appear that they will have any chance to recover the money they spend to get customers to open these accounts (there are no fees and they have to pay out the interests, even if very small)
Oh, they recover it. Banks make money by having deposits that they can use to lend out. They do pay interest on deposits, but not as much as they earn on your money. If they persuade you to have a savings account in addition to your checking account, then you might find it convenient and then move your money out of a different institution into their savings account. Or you might stop hoarding it under your mattress. Or whatever. More money in their accounts means more profit for them.
I don't know whether banks make more profit per dollar in savings or checking accounts. I see banks pushing for both. I think they simply view more accounts as a good thing because it can lead to more total savings in their institution. That's how they make money.
The Livret A is a very specific product. It's tax-exempt and would historically not be available through regular banks. Commercial banks can now offer it but they only collect the money on behalf of the Caisse des dépôts (CDC). The CDC then pays interest to the savers and a commission for the bank. The commission is baked into the system, not charged to the customer directly but since the interest rate is set centrally, banks cannot compete on that. So this is risk-free money for them (but on the flip side it does not help them meet capital adequacy requirements). Other savings account or products have different rules.
Another angle to consider is that a livret A was historically very attractive for consumers (and was certainly perceived as such) so that many people would have a checking account at a regular bank and another account at the Caisse d'épargne or the Banque postale just to open a livret A. For commercial banks, the alternative therefore isn't having your money on your checking account vs. your livret A or another savings account, it was having your money on a livret A they administer vs. seeing you run away to another institution. There is also a cap on the livret A and you're not allowed to save more money by opening several of them at different banks.
At the same time banks have been complaining that the decrease of the interest rate (and consequently of their commission) makes the whole scheme a lot less interesting for them. For what it's worth, I recently (re)opened a bank account in France after living abroad for a long time and the customer advisor did not seem particularly interested in pushing a livret A.
I have worked for BNP (BNP PARIBAS) a french bank.
From my experience it is the easiest sale to make when working for a bank.
Because saving is sold as a long term investment your client is not likely to close the account any time soon. From this product on you could open a broker account if the client wants to take more risks ( yhea yet another sale). If the client is very keen on no risks, there are insurance products (they make plenty of money from insurance) or callable investments that you can propose.
Retail banking works by attracting a maximum number of people and selling them a maximum amount of product.
To answer you question is it profitable?
I am sure it is not ( right now your savings account costs the bank money because of super low rates in the EU). I think it is all about increasing or maintaining market-share that you see some banks offering some cash just for opening an account.
At the moment we have to sell credit cards to people that is where banks make good money.
If you would like me to go more in depth on a specific subject i mentioned here just ask. Hope it helped.
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