Customized Profitability Model
ProfiTRAC™ is a sophisticated transfer pricing profit module that uses customized rule-based algorithms and flexible user-driven “rule-sets” to create accurate asset and liability spreads and net profit calculations of each individual account and customer relationship.
Unlike many financial industry profit models that apply basic profit calculations with no detailed customization (or that use generalized average industry rates) for all products, ProfiTRAC™ is a proprietary profit system utilizing Matched Rate Transfer Pricing to ensure the most accurate method for measuring the performance of lending or funding activities. It easily supports relationship-based accounts and has many highly customized rule-sets that an institution can define.
The ProfiTRAC™ framework is tailored to each client by developing a series of rule-sets specific to your unique products, revenue and expenses. We calculate six main revenue components (e.g. matched interest margin, non-interest income and fee income) and six expense components (e.g. origination, transaction expense and loan loss risk profiles and provision), while incorporating a wide range of rule-set algorithms for each account to calculate costs and derive balanced net profit calculations. It also allows you to allocate capital to each account, enabling relationships to be evaluated on the basis of Return on Capital.
The ProfiTRAC™ model allows clients to customize your funding curve to reflect your specific funding costs. We update a comprehensive database of US funding rates regularly to provide a range of accurate funds transfer pricing rate options.
Households are ranked by their profit contribution, assigned a profit percentile and segmented into four tiers based on their ranking of total profit contribution, allowing deep insights into your client relationships: Platinum (top 5%), Gold (next 35%), Silver (next 50%) and Bronze (bottom 10%).
Armed with clear and precise product, account and relationship profitability and our savvy geocoding and householding processes, this “bottom up” custom model allows leaders to view profitability across mission critical performance areas like branches, competitive market area, household relationships and product levels (including both retail and commercial).