Developing and Implementing an Integrated Customer Profitability / Usage Measurement System at the Federal Home Loan Bank of Pittsburgh

Developing and Implementing an Integrated Customer Profitability / Usage Measurement System at the Federal Home Loan Bank of Pittsburgh

Jeffrey A. Sapp

Jeffrey Sapp and Company

2010 Stonier Graduate School of Banking
Strategic Capstone Project

TABLE OF CONTENTS

Executive Summary 3

Part I – Introduction and background

  A. History and Mission of the Federal Home Loan Bank System 6
  B. Federal Home Loan Bank of Pittsburgh 10
    1. Market Territory 10
    2. Customer Base 11
    3. Products and Services 11
    4. Ownership and Capital Structure 13
    5. Economic Environment 14
  C. Coopereative Form of Business 14
    1. Origin and Principles 15
    2. Types of Cooperative Models 16

Part II – StrategIC PURPOSE

  A. Background: FHLBank vs. A Traditional Bank 18
  B. FHLBank Business Strategy 20
  C. Rationale for Customer Profitability / Usage Measurement System 21
  D. Improving the Measurement of Customer Profitability / Usage 22
  E. Why Measuring Customer Profitability / Usage is Critical 23
  F. Assessing the Customer Profitability / Usage Measurement in a Strategic Context 24
    1. Financial 24
    2. Customer-Shareholders 25
    3. Operational 25
    4. Behavioral 26
  G. Implementing a Customer Profitability / Usage Measurement System 26
    1. Facilitating the Implementation 26
    2. Determining Whether to Use Internal vs. External   Resources 28
    3. Training Users on the System 29
    4. Implementation Schedule 29
  H. Post Implementation and the Usage of the System 30
    1. Process Improvement 30
    2. Allocation of Income and Expenses 31
  I. Future Opportunities 32

Part iII – FINANCIAL IMPACT

  A. Estimated Cost for Developing the System 33
  B. Cost Estimates for Various Systems 34
  C. Risks of Investing in the Project 35
  D. Best and Worst case Scenarios 36

Part Iv – NON-FINANCIAL IMPACT

  A. Anticipating Potential Implementation Risks 36
  B. Plan for Overcoming... [continues]

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