Banking · Retail Banking Strategy
If a bank observes that its Retail Deposit to Total Deposit ratio is increasing while its Net Interest Margin (NIM) is simultaneously compressing, what is the most likely structural challenge the bank is facing in its retail strategy?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The retail asset portfolio consists exclusively of short-term variable loans.
- 2The bank has failed to cross-sell fee-based third-party products entirely.
- 3The administrative and operational costs of managing a large number of small-ticket retail accounts exceed the benefit of lower interest costs.✓
- 4The bank is over-relying on volatile current and savings accounts.
Correct answer
The administrative and operational costs of managing a large number of small-ticket retail accounts exceed the benefit of lower interest costs.
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