Does Distance Influence Profitability of Bank Customers?
This study aims to identify whether customers who live further away from bank branches where they opened their checking accounts are as profitable as those who live closer. For this purpose, it were selected 30 bank branches of one of the largest retail banks in Brazil and it was used analysis of variance in order to compare customer mean profitability of these branches among primary, secondary and fringe trading areas for those customers who receive their salaries by the bank and also for those who don´t receive. Regardless of whether customers receive or not their salaries by the bank, those who live further from the branches where they opened their checking accounts are as profitable as those who live closer and, in some cases, they are more profitable. So, Banks must take into account all customers of a branch and not only those who live closer it in order to develop strategies for customer retention and for increasing profitability provided by customers. It was also possible to conclude that trading area theory according to which the importance of each one of three trading areas in relation to profitability provided by customer is different, isn´t applied for banks, because there aren´t no significant differences in profitability provided by customers according to the distance they live from the branches. Generalizations are limited to São Paulo (Brazil) city and active individual customers.
