OPTIMIZING CUSTOMER PROFITABILITY AS A KEY FINANCIAL PERFORMANCE INDICATOR FOR ACCELERATING MARKET SHARE GROWTH

Abstract

This study examines the effectiveness of Customer Profitability compared with Unit Profitability as alternative corporate-level Key Financial Performance Indicators (KPIs) for accelerating market share growth in the banking sector. While previous studies primarily treat Customer Profitability as an operational analytical tool, limited research has examined its role as a strategic performance indicator at the corporate level. Using a comparative case study of two national commercial banks operating in similar market segments over ten years (2014–2024), this research applies a Regulatory Impact Assessment (RIA) framework to evaluate the implications of different KPI regimes. The analysis combines financial performance indicators including assets, loans, deposits, CASA, and profit after tax with qualitative insights from internal policy documents and expert interviews. The findings indicate that banks adopting Customer Profitability as a corporate KPI demonstrate stronger and more consistent market share growth than those relying on Unit Profitability indicators. Customer Profitability strengthens organizational focus on high-value customers and supports strategies that increase share of wallet and long-term competitive performance.