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?
Sample Solution
There are a few possible explanations for why the bank is making lower profits despite having convinced over 50 percent of its customers to use online services. One possibility could be that the estimated costs of service through both channels were inaccurate and the true cost of providing online services is actually higher than expected. Another potential explanation could be that offering discounts or other incentives to encourage customers to switch from branch services to online banking has resulted in decreased profits due to reduced revenue per transaction. Finally, it’s possible that customers who were already using online services before the motivation campaign simply switched back to branch services once they realized they wouldn’t receive any additional benefits, resulting in decreased profits overall.
Sample Solution
There are a few possible explanations for why the bank is making lower profits despite having convinced over 50 percent of its customers to use online services. One possibility could be that the estimated costs of service through both channels were inaccurate and the true cost of providing online services is actually higher than expected. Another potential explanation could be that offering discounts or other incentives to encourage customers to switch from branch services to online banking has resulted in decreased profits due to reduced revenue per transaction. Finally, it’s possible that customers who were already using online services before the motivation campaign simply switched back to branch services once they realized they wouldn’t receive any additional benefits, resulting in decreased profits overall.