Work detail

Customer Lifetime Value - Application to Banking Sector

Author: Mgr. Zuzana Lajksnerová
Year: 2016 - summer
Leaders: prof. PhDr. Ladislav Krištoufek Ph.D.
Consultants:
Work type: Finance, Financial Markets and Banking
Masters
Language: English
Pages: 77
Awards and prizes:
Link:
Abstract: This thesis deals with the calculation of the customer life value for clients of second largest
Czech commercial banks - Československá obchodní banka a.s.. The aim is to estimate the
revenue each individual brings to the bank within the first year, two, four since creating a
profile but also during the whole time he or she remains in their customer base. The first,
theoretical part contains of structured overview of the modeling approach from available
literature. In the second part, we develop two different models, which are subsequently
applied on client data of 2.7 million ČSOB customers. The prediction takes into account
both revenues from each product and probability that customer will use this product. For
estimation of the two models we use several different econometric methods, thus linear
regression, bootstrap, probit and multinomial logit. The results show that demographic data
such as age and gender, as well as product related variables, greatly inuence the final level of
value of customer. It is also shown that higher potential earnings are associated with men,
people of working age and loyal customers.
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