Background Note | HBS Case Collection | April 2002 (Revised March 2006)

Economics of Retail Banking Note

by Frances X. Frei and Dennis Campbell


Explains the financial operations of retail banking, highlighting profitability challenges facing the industry. For U.S. banks, it is quite common for more than half of the customer base to be unprofitable and to have relatively few customers make up the vast majority of profits. Attempts to explain how retail banks generate revenue and incur costs while serving their customer base.

Keywords: Customers; Economics; Cost; Banks and Banking; Profit; Revenue; Service Operations; Banking Industry; United States;


Frei, Frances X., and Dennis Campbell. "Economics of Retail Banking Note." Harvard Business School Background Note 602-153, April 2002. (Revised March 2006.)