Proof of concept.
Try one account and see how easy deposit profitability can be.
Just pick one and sit down with pencil, paper and a calculator. Start by listing the revenues the account can produce. Things like fee income and debit swipe interchange. Don’t forget the biggest revenue piece…the benefit of reinvesting those funds in loans and investments. Add it all up.
Next list the direct costs involved. Things like interest paid, IT and personnel expense, plus some expense for every transaction made. Don’t include things like bricks & mortar or general overhead. Just direct costs of handling that account.
Here’s a hint to keep you on the right track with transaction costs. If a transaction doesn’t require anybody to manually intervene (like an online transfer) make it cheaper. But if it does require a person to complete it (like a teller visit) make it more expensive.
Get your data right out of the core system. Don’t worry about making it perfect. Just get it down on paper. Then add up all those transaction costs and subtract them from your revenues.
Congratulations…You’ve just calculated your deposit profit (or loss).
Now that you’ve proven it to yourself, calculate it for every account you have. You will see some surprising things when you start comparing the results.