Here’s what you all get wrong about this: if I can’t withdraw, it’s not a bank. Points are just prepaid assets and services that you may or may not be able to ever receive. Bank money does not simply “expire” (it can be used for fees however)
This seems to describe a lot of sectors of the economy, unfortunately
Legal services alone are about 3% of GDP.
This understates things, perhaps, as it's unclear whether it captures the financialization of non-finance sectors. (e.g. auto leasing, and what the article in the OP describes.)
Needless to say, this is historically unusual. And you don't need to go very far back in time to find a period where manufacturing was 25% of GDP and FIRE just 10%.
"Just a bank" doesn't fly airplanes. It may own them, but it doesn't fly them. "Just a bank" doesn't sell tickets. Doesn't have a department that finds lost luggage. Etc.
But "airlines are financialized now" doesn't capture eyeballs in the same way.
I don't know. Big companies sometimes do silly stuff - even if this day it's mostly outsourced to marketing agencies. It wouldn't surprise me to learn that some bank somewhere is operating a de-facto airline for some reason that somehow makes them money...
The banks either did this themselves or had a company that did it for them. They physically flew checks to the city of the bank they were written on, because flying the plane was cheaper than one day's interest on a billion dollars worth of checks.
This stopped, IIRC, back in the 1990s, once electronic settlement got fast enough.
"What is a bank?
A bank is a financial institution that is licensed to accept checking and
savings deposits and make loans. Banks also provide related services such as
individual retirement accounts (IRAs), certificates of deposit (CDs),
currency exchange, and safe deposit boxes.
There are several types of banks including retail banks, commercial or
corporate banks, and investment banks."
Notice how none of that is to do with how much money is made from financial shenanigans vs products and also there is no mention of running loyalty programs etc.
Every time there is one of these articles ("Starbucks is just a bank" was another recent offender) it's worth actually referring to the definition of a bank and reminding yourself that unless the article is in The Economist, the FT or the WSJ, the journalist themselves probably has absolutely no idea what a bank is, or does.
Yes big companies have big financial and treasury functions. Maybe that’s surprising to some folks, but not to anyone who’s actually worked in any kind of industry. Trying to fund your activities is one of the most important parts of any business and companies who get really good at that even sometimes find ingenious ways to make it generative of PNL in and of inself. That doesn’t make them banks or financial institutions.
My favourite example was one a friend told me that he had learned at business school doing an MBA. They did a study on Bailey’s Irish Cream (the liqueur). It came about apparently because there were big government subsidies to support dairy farmers and support Irish whiskey producers. So the farmers and distilleries where producing far more than they could sell in order to collect the subsidies. The genius inventor of Bailey’s came up with the business idea of getting the producers of cream and whiskey to pay him to take their excess inventory which he then turned into the liqueur which he sold for a profit. So he had a manufacturing business where he was getting paid by every part of his own supply chain.
If the answer is no, then they are not a bank.
A bank doesn't need to fly planes to be in business
"Porsche yesterday revealed it earned three times as much money from trading derivatives as it did from selling cars"
https://foreignpolicy.com/2007/11/14/porsche-makes-more-mone...
> Another London-based analyst said: “[Porsche] is a hedge fund investing in just one stock [Volkswagen].”[0]
> Because of its heavy reliance on Volkswagen's manufacturing capabilities, Porsche knew it had to increase its control [of Volkswagen] to mitigate the risk of its production being affected. Porsche used debt to start buying Volkswagen shares on the open market. [1]
> All of the options-trading Porsche takes part in relates to its stake in VW, which it has built up from scratch over two years. Porsche used the options to hedge against the likelihood of VW’s shares rising after its interest was made public: they did, from about €40 to almost €180. [0]
They wanted to buy a chunk of VW. After they started doing so, they hedged against the stock price so that they wouldn't get screwed if the price of VW popped. Then the price of VW popped, and their options paid out big time. That doesn't make them a hedge fund, it just make them competent (and somewhat lucky).
[0]https://foreignpolicy.com/2007/11/14/porsche-makes-more-mone... [1]https://dailyinvestor.com/world/10426/incredible-story-of-ho...
That really is nothing whatsoever to do with what an airline does.
Again, X is the dumbest possible name for aything, I will never user it, just call it Twitter if you have to.
No one is saying X, the platform formerly know as Twitter, is a bank.