Lower Profit making

Consider a bank that offers both online and branch access for customers. Based on the estimated costs of service through the two channels, the bank has decided it should motivate customers to use online services in place of branch services. After several months, it has persuaded over 50 percent of its customers to use the online service for most of their business. However, with the latest profit report, it appears that the bank is actually making lower profits than before. Why might that be?

Another potential explanation is that branch services allow for better customer relationships and upsell opportunities, leading to increased sales from customers who would otherwise not use the online service. Finally, it's possible that customers who switch to using the online channel often choose lower-cost products or services than those available through branches, reducing profit margins.

Sample Solution

There are a few possible reasons why the bank may be making lower profits despite persuading more customers to use its online services. One possibility is that the cost of maintaining and upgrading its online platform was underestimated, resulting in higher costs than anticipated for providing this service.

Lower Profit making

Sample Solution

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