Relationship Profitability for Corporate Banking at Lloyds TSB

Thorogood provided an efficient multi-dimensional modelling solution to the relationship profitability analysis needs of Corporate Banking within Lloyds TSB

Background

Lloyds TSB is one of the largest retail banks in the UK. The group has more than 2,300 bank branches and employs more than 77,500 people. Within Lloyds TSB, the Corporate Banking Division is responsible for servicing large corporate clients.  The corporate banking sector is highly competitive and corporate entities are demanding customers.  For Corporate Banking to deliver profitable growth, it needed to focus on the most worthwhile opportunities. This required detailed information on the relative profitability of its customers.

Issues

Corporate Banking customers are able to access the Bank’s services through a variety of channels and business units.  Before implementing the new architecture, Finance used a number of desktop software tools to provide a consolidated view of customer contribution by quarter. 

This view did not adequately report the services used or give adequate insight into the profitability of a customer relationship. The production of this information was also highly manual and prone to error. 

Solution

The solution developed by Thorogood involved the automated and timely integration of diverse data feeds, and the use of a powerful multidimensional modelling tool to apply the required allocation logic. The allocations are applied through a set of tailored algorithms and managed through a bespoke user interface. The logic uses a variety of drivers to allocate costs to the lowest level of granularity.

The system is used to assess the true profitability of a customer’s relationship with the bank and to provide consolidated reporting and analysis. Complex data was made understandable and accessible to managers so that they could explore and visualize key relationships between variables easily.

This analysis of customer profitability helps the group incentivise relationship managers and identify cross-selling opportunities.

Thorogood input

Thorogood has worked on many projects within Lloyds TSB during the last 15 years and is skilled at translating the vision of financial systems services experts into practical and cost-effective solutions.

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