Half of your deposit accounts are unprofitable…
And you can’t fix it.
When we run the numbers we find between 30% and 70% of accounts don’t produce a single dollar of monthly profit. And I’m talking about direct marginal profit, not after loading them up with bricks & mortar expense or general overhead.
The reason you can’t fix it is you don’t know who these accounts are. And if you don’t know exactly who they are the only tool available to you is a blanket fee on everyone or some other global change. And that’s like performing delicate surgery with a chainsaw. Lots of collateral damage.
You can’t tell by looking at them and you certainly can’t tell by their balances. You need instrument-specific individual P&L statements for each and every account produced from core system data so you can separate profitable from unprofitable.
You can’t even accurately identify your best customers without measuring deposit profitability, and that means your marketing targets are wrong too.
Just like everything else at the bank, what gets measured gets managed.
It’s a simple 3-step plan. Measure your deposit profitability on a transaction level basis, separate and segment your accounts by profitability, and apply segment-specific strategies to grow your profitability.