Monitoring the customer base to achieve profitability

Abstract:

This paper deals with profitability enhancement in retail banking. More explicitly we will focus on how banks can gain understanding of customer bases in order to enhance profits. We will argue for proper segmentation approaches, where profitability of the customer relationship is a central ingredient of the analyses. Segmentation will be a central theme and we try to show what developments are needed in order to cope with the turbulence in the business environment. The paper will be of a theoretical nature. Empirical observations will be limited, and serve more as illustrations of our approach.

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