Pilgrim Bank
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 ... Show more content on Helpwriting.net ...
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