Low-balance bank accounts -- Part 1: Is there a pathway towards profitability?

Porteous, David
September 2015
Journal of Payments Strategy & Systems;Autumn2015, Vol. 9 Issue 3, p305
Academic Journal
There is a business case for banks to issue basic transactional accounts, although most individual low-balance accounts are probably loss making for most large banks -- profitability is more likely at the level of the client segment, in which other products cross-subsidise the overall returns from the target group. Banks' use of agent networks for account opening and cash handling transaction will help but not solve the conundrum of account-level profitability. Reaching breakeven at this level will happen only as clients move away from a cash-based world towards more digital transactions in the future. This paper reaches these conclusions based on cross-country evidence from fiv e large emerging market retail banks involved in the GAFIS project, which completed in 2014.


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