Imagine that you are hired as a data analyst for a bank. The bank would like to learn more about its customers’ spending and banking habits to identify areas of improvement. You have been asked to review the bank’s income statements over the last five years and identify trends that will allow them to understand their customers better.
Download your chosen bank’s annual income statements from the last five years from the Mergent Market AtlasLinks to an external site. database in the University of Arizona Global Campus University Library. Review the Mergent Market Atlas Tip SheetLinks to an external site. resource for tips on accessing and searching the database. Use the “Company Financials” tab in Mergent Market Atlas to access the income statements.
In your paper,
Identify an area of the bank’s income statement related to customer spending.
Describe the data points or variables that give a complete picture of the customers’ spending pattern for the last six months.
In addition to the income statement, explain which other data sources you might use to understand the customers’ spending patterns.
List the steps you will take to prepare all these data sources such that they afford clear and accurate information.
Build a frequency table, a bar chart, and a pie chart using Excel for the identified variables that explain the customers’ spending patterns. Review the Microsoft Excel Help: HomeLinks to an external site. webpage, available for resources to help utilize Microsoft Excel. Use the same three variables in each table and chart to display the same data in three different formats.
After presenting your data in three formats, evaluate which tables and charts you find most helpful for communicating the desired message about the bank’s customers.
2 -3 pages apa use book as reference Jaggia, S. (2023). Business analytics: Communicating with numbers (2nd ed.). McGraw-Hill Higher Education
For the purpose of this analysis, we will focus on "Service Charges on Deposit Accounts." A high trend in this revenue line suggests active, fee-generating customer behavior.
2. Describe the Data Points and Variables for Customer Spending
To move beyond the high-level annual income statement and gain a granular understanding of customer spending over the last six months, a data analyst needs transactional variables extracted from the bank's internal operational databases, not the public financial statements.
To get a complete picture, we would focus on three key variables:
| Variable Name | Data Type | Description and Insight |
| Transaction Volume (Count) | Quantitative (Discrete) | The total number of non-ATM debit/credit card purchases made by a customer per month. Insight: Indicates the customer's overall frequency of spending. |
| Average Monthly Overdraft Frequency | Quantitative (Discrete) | The average number of times a customer incurred an overdraft or NSF fee per month. Insight: Signals customers living paycheck-to-paycheck or exhibiting financially risky spending habits. |
| Merchant Category Code (MCC) Group | Categorical (Nominal) | The type of merchant where transactions occurred (e.g., Groceries, Restaurants, Online Retail, Travel). Insight: Reveals where and how the bank's customers are allocating their disposable income. |
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3. Additional Data Sources for Understanding Spending Patterns
While the income statement provides a historical financial benchmark, it offers no detail on who is spending what and where. To understand the customers better, the analyst must integrate data from other sources (Jaggia, 2023):
Customer Relationship Management (CRM) System: This system contains demographic and behavioral data essential for segmentation.
Data Points: Customer age, geographic location, occupation, marital status, and products held (e.g., mortgages, investment accounts).
Sample Answer
Data Analysis Report: Understanding Customer Spending Habits
1. Identify an Area of the Bank’s Income Statement Related to Customer Spending
A bank's income statement primarily reflects the bank's own revenues and expenses, not a detailed breakdown of individual customer spending. However, the most direct indicator of customer spending habits within the context of a bank's income statement is a revenue line item generated from transaction activity.
The best area of the income statement that reflects customer spending and banking activity is Non-Interest Income, specifically:
Service Charges on Deposit Accounts (or Fee Income): This includes fees collected from customers for overdrafts, non-sufficient funds (NSF), monthly maintenance, foreign transaction fees, and ATM withdrawal fees. Higher transaction fees often correlate with higher transaction volume or specific spending behaviors (e.g., frequent international travel, low average balances, heavy reliance on debit cards).