Pilgrim Bank

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Executive Summary
The purpose of this report is to analyze customer’s profitability to provide relevant information for Internet strategy in Pilgrim Bank. To get a conclusion from the disagreements between charging online banking fees and offering customers incentives to use online banking, I obtained relevant data and compared online and offline customers’ profitability. Since only comparing balance level will miss some important information, such as, the cost of serving individual customers, therefore, in my analysis, I primarily focus on profitability.
To analyze customer profitability, we firstly summarize how Pilgrim Bank generates revenues, we found that there are three main ways: (1) Through investment income from deposit
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Referring to table X in appendix, it can be seen that the R square of these tables are about 0.17, which means 17% of the variance of profitability could be linearly explained by the independent variables (age, district, income, etc.). Thus, according to the regression results, it is apparent that income has positive relationship with profitability for online profitability as well as offline since the coefficients are all positive numbers. However, when I look in depth, I find that the Age group 5 (45-54 years old) has the highest average profitability for online segment, and this observation may give you some suggestions on online banking pricing strategy. In terms of how profit varies for different income groups, we can refer to table XX. It shows that people are divided into 9 different groups based on their income. In this table, it is clear that people with lowest income make the lowest profit for the bank on both online and offline segments. On the other hand, people with highest income, which is 125,000 per year or more, appears to be the most profitable customers of the bank. In addition, people from different districts also contribute different profit as well. For instance, people live in district 1200 are most profitable clients while those who live in districts 1100 and 1300 are less profitable.
Above all, based on my analysis, online customers’ profitability is higher than offline customers’, so I think we should
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