BUAD477.10 � Mid-Term Exam

BUAD477.10 � Mid-Term Exam - Memo To: From: Date:...

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Memo To: Suresh Sundaram From: Chris Mitchell Date: 30 March 2008 Subject: Great Dakota Bank: Online Banking Company Analysis: Founded in 1952, Great Dakota Bank began as a small regional bank and has grown steadily to now serve 750,000 customers in the Dakotas, Minnesota, Iowa and Nebraska. They offer the standard variety of products, including loans, credit cards, mortgages, and brokerage accounts. In the retail division the offer four types of checking accounts (premium, standard, student and budget) and three types of savings accounts (regular, money market and certificate of deposit). They create revenue in two different manners, through interest income and fees. Revenues from investment of customer’s deposits represent interest income. Recently they have introduced online banking. Online Banking: In 1998 Great Dakota Bank introduced DakotaOnline, an online banking service that provided customers with most of the services offered at branches and through telephone. Online banking is convenient for the customer and much more cost-efficient for Great Dakota. An analysis of DakotaOnline performance was 1
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completed in January 2001. This analysis showed what activities online customers were using and compared online versus offline customers views about online banking. Almost all DakotaOnline customers were checking their account balances online (93%) and most were transferring funds between accounts (52%) and reconciling accounts (39%).What arose as a problem was that online customers were not utilizing the electronic bill paying service provided by DakotaOnline (14%). This is a major problem because Great Dakota sees this service as the future in paying bills and at five dollars a month they would be making a good amount of money through this service. The most intriguing part of the analysis was finding that online banking customers were carrying higher balances than offline customers. This translates into higher interest revenue for Great Dakota every month. Also, online customers, on
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BUAD477.10 � Mid-Term Exam - Memo To: From: Date:...

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