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Infinity Bank (A): Retail Branches and Customer Profitability

Published 03 Jan 2006
Reference 5348
Region Europe
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Prizes & Awards

Winner of 2009 ECCH Awards, Finance, Accounting and Control Category

Summary

A retail bank is considering a strategy to improve branch performance. Central to the strategy is a recent study of profitability of three retail products: current accounts, credit cards, and mortgages. The strategy involves giving branch managers incentives to sell profitable products. A senior bank manager evaluates the product-profitability-based strategy in the light of recent statistics on major variations in profitability of customers (these statistics are included in the database provided with the case).

Teaching objectives

The case aims: 1. To illustrate the dangers of product-focused strategies that ignore customer value. 2. To demonstrate need for customer-profitability analysis. 3. To consider the difference between average customers and marginal customers. 4. To illustrate the sources of variations in customer profitability. 5. To discuss the actions to manage customer portfolios. 6. To show that customer-profitability analysis can serve as an excellent communication tool.

Keywords
  • Customer profitability
  • Product profitability
  • CRM (customer relationship management)
  • Retail banking
  • AR2006
  • AR0506
  • RD0306