Customer Profitability Tests Seen Sweeping the Industry

A majority of U.S. banks expect to be using customer profitability measurement systems by yearend, according to the research firm Mentis Corp.

In a sign of these systems' rapid proliferation after years of development, Mentis said 31% of banks currently assess consumer profitability and another 25% plan to do so this year.

Mentis said its study shows banks are focusing more on relationship management than on the single products and individual accounts that were more easily tracked in the past.

"Calculating customer profitability is no easy task," said research manager Mary Knox. Getting down to the "customer level is an arduous, often painful process."

The complexity was reflected in the large proportion of banks lacking confidence in the accuracy of their calculations.

Only 14% of those that calculate retail customer profitability considered the assessment accurate.

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