Cancelling costs them no money — banks these days don't make money on customer accounts.
And besides that, banks need capital reserves in the form of customer deposits; if too much money flows out then they will have to either acquire customers or pause their real moneymaking activity (loans).
Your account doesn't make them significant money. Retail banking in general makes boatloads of money, and deposits are central to this now that we're out of zero-interest-rate-land.
USA's fractional reserve requirement is now 0%. UK has also gotten rid of their reserve requirement as well. In the UK, the limit to what the bank can loan out is more determined by the market cap of the bank (committed shareholder value). Cash is only strictly needed to cover ... customer deposits.
So in the UK, if a bank gets rid of customer deposits entirely, then it kind of doesn't need any cash anymore. It can just lend money out of thin air based on its total net worth (market cap).
Talking about banking in general is generally a huge mistake. While deposits may be central, retail deposits are irrelevant for the banks that do > 70% of banking.
> now that we're out of zero-interest-rate-land.
Doesn't matter to them.
We’re talking about an individual sticking it to the bank he has an account with by cancelling it. Retail sounds entirely relevant here.
Citibank interest rate on savings accounts is less than 1%, more like 0.1%, and there are account fees too. They're telling you load and clear "We don't want your money" - you can't argue with that empirical evidence, straight from the horse's mouth.
Jamie Dimon is the most popular banker in Washington because Chase has (by far) more retail depositors and retail deposits than any other bank. That's power.
The main thing is that they do care about retention.
I don't follow; why would regulations on consumer accounts change the price of commercial customer accounts?
Come to think of it this was all also at the time of very low rates which was more likely to be the issue.