Unformatted text preview: l keep paying these high fees and that FIB would want Skerret to pay such high fees fro m a customer relat ionship standpoint. The facts also suggest that the customers do not use the bank services uniformly. For example, Robinson and Skerret have a lot of transact ions wit h the teller or ATM, and also inquire about their account balances more often than Farrell. This suggests crosssubsidization. FIB should be very concerned about the crosssubsidization. Co mpet it ion likely would “understand” that highbalance lowact ivit y t ype accounts (such as Farrel) are highly pro fitable. Offering free services to these customers is not likely to retain these accounts if other banks o ffer higher interest rates. Compet it ion likely will reduce the interest rate spread FIB can earn on the highbalance lowactivit y accounts they are able to retain. 521 3. Possible changes FIB could make are: a. Offer higher interest rates on highbalance accounts to increase FIB’s compet it iveness in attracting and retaining these accounts. b. Introduce charges for individual services. The ABC study reports the cost of eac h service. FIB has to...
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This note was uploaded on 10/11/2010 for the course ACCT 321 taught by Professor Cole during the Spring '10 term at University of Miami.
- Spring '10
- Cost Accounting