costacctg13_sm_ch05

Widnes coal sthelens glass total 7280 1600 500 600 200

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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.

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