This case tests profitability analysis and strategic decision-making under constraints. The candidate must build a financial model to compare account-level economics, scale to market size, and ultimately recommend which product to launch first based on lifetime profit generation and market dynamics. Strong candidates will identify the tension between profit maximization (checking) and the client's stated objective of lowering cost of funds (suggesting savings accounts with higher deposits).
Our client is BankCoCard, a US credit card subsidiary of the major international bank BankCo. They have a rapidly growing $16 billion dollar credit card portfolio. BankCoCard is interested in lowering their cost of funds for their credit card program by starting an online bank.
BankCoCard would like to know if they should start an online bank and if so, should they launch a savings or a checking account for their new online bank.