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

David Porteous

Journal of Payments Strategy & Systems, 2015, vol. 9, issue 3, 305-310

Abstract: 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 five large emerging market retail banks involved in the GAFIS project, which completed in 2014.

Keywords: low-balance bank accounts; business case (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:aza:jpss00:y:2015:v:9:i:3:p:305-310

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