Account Profitability Analysis
Account Profitability Analysis (APA) is used to calculate the net profit or loss on DDA or SAV accounts - the difference between the revenue generated for your bank by having the account and the cost it takes to maintain the account. APA is most often used for commercial customers, customers using Cash Management or Sweep products, or customers maintaining multiple DDA accounts.
Why is APA important to my bank?
Being able to identify the customer relationships that are the most beneficial/profitable to your bank puts you in a position to "foster" those relationships and offer the customer incentives to remain with your bank.
Conversely, knowing which customer accounts that are not profitable to your bank gives you the opportunity to analyze their current services and adjust them as needed.
How do we get started?
Identifying the accounts you would like to analyze is the first step. As a standard, the system automatically analyzes all commercial accounts with an end-of-month statement cycle. As an option, analysis can be prepared for: all statement cycles of commercial accounts, all statement cycles of commercial and personal accounts, or all EOM statement cycles of commercial and personal accounts. All accounts will be analyzed and reported, but only bank-selected accounts will receive an APA Statement.
After deciding which accounts to analyze, you are ready to define your bank's APA Product. CSI offers great flexibility in this area. The APA System uses tables that can be defined by your bank to use in the analysis. Up to nine separate APA Tables can be built with different charges to correspond to the account products offered by your bank. For example, APA Table Code 1 may be built to assess profitability on your general commercial/business accounts. Table Code 2 could be used to assess profitability on your larger corporation business account type and so on.
What is included in the Analysis?
The analysis includes charges that are automatically captured by the system (CSI-captured) and charges that are entered by your bank (Bank-captured).
Just a sample of the CSI-captured charges that can be analyzed in the tables include: Local Items Deposited; On-Us Items Deposited; Foreign Items Deposited; Charge per Cash-In, etc. For Cash-Ins you can also specify the number of free cash-ins the account can use before the charge begins to apply.
Bank-captured miscellaneous service charges can also be set up for analysis such as: coins deposited; cashier's checks; wire transfers; lock box charges, etc. These charges can be soft posted (used for account analysis only) or hard posted to the account (deducted from the account).
CSI understands that even with nine tables, you will have accounts that fall outside of the tables that are established. Account-level override fields exist for all of the charges established in the tables and can be used for these unique accounts.
Are there offsets available for the customer?
Yes, Earnings Credit options are available to value your customer's balances against the cost of services they are assessed for their accounts.
An Earnings Credit Percentage can be established for each of the nine APA Tables to determine the account's earnings for the month. You can set up the percentages 'across the board' for a table or break the rate into tiers and thresholds.
Once calculated, this amount will represent the potential earnings on the investable balance of a customer's account. The Net Investable Balance is then used to offset any indirect charges (soft charges) on the account.
You can also include the customer's loan balances in the APA calculations with the Earnings Credit Rate for Loans, as well as, any service charges, NSF charges or other charges the customer has been assessed.
In addition to the earning credit percentages, you can also include some of your bank's normal fees in the analysis by soft charging them instead of hard charging them to the account. Fees available for soft charging include: Stop Payment Fees; ATS Fees; Negative Balance Fees; Allowable Overdraft Fees; NSF Fees; Chargeback Fees: and Re-Present Fees.
What if the customer has multiple accounts?
As a separately priced option, accounts can be grouped together for analysis. When combining accounts, several options exist as to how the account(s) will be charged.
Are APA Statements available for the customer?
Yes. An APA Statement that contains the account's Service Analysis Detail and Account Analysis information can be produced.
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Background Info / Getting Started |
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Getting Started Using Account Profitability Analysis Overall |
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