Account Profitability

1
Checking Account Modeling
OPAs program points out that most banks have a
problem with checking and savings account in that
the majority of them lose money even with NSF
fees included. Higher interest rates will
improve the profitability of those accounts with
good balances but a large number will never break
even.
2
Most Profitable Customers
Banks will be able to see that the top 10 of
profitable customers provide almost all of the
profit. The banks calling efforts will be
directed to those at the top and those at the
bottom will receive attention to stop the losses
3
Customer Profitability
The following report shows the what if increase
of an existing plans balance to avoid fee and an
increase of the monthly service charge. The
simulations show the new plan structure changes
and how they affect account and customer
profitability. The reports and tools to
intelligently design products are very extensive.
4
Account Profitability
Every deposit account, loan, credit card and safe
deposit box is shown in income statement format
using all customer activities which are
downloaded from the banks core system. These
activities are monetized using each banks own
costs. Other systems use banking generic costs
which are assumed to reflect cost facts. This
shortcut defeats the purpose of a program based
on profit facts.
5
New Method of Bank Management
Using Funds Transfer Pricing, interest income is
imputed for deposit accounts and interest expense
is imputed for loans using a bank-determined rate
based on term of the rate guarantee. Funds
Transfer Pricing completes the process of deposit
and loan profitability calculations.
6
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