Question 3. Customer Profitability (25%)

Fjalla bank has similar to other banks offered online services to its customers for

several years. However, the bank has never managed to find out whether online

banking customers are more profitable than customers that do not use the bank's

online services. The bank recently sampled data on how profitable each customer

has been for the bank, how long a customer has been with the bank, whether the

customer uses the online services or not and where the customer lives.

The data can be found in the fileFjalla bank.xlsx. Each line in the data table

corresponds to one customer. The first data column has the data on the profit of

each customer. The second column includes 1 if the customer uses the bank's online

services, otherwise 0. The third column includes information on how long a customer

has been with the bank, measured in years. The last column lists the postcodes of

the districts that the customers live in.

a) (10%)Build and interpret a regression model that can be used to forecast the

profitability of Fjalla bank's customers.

b) (4%)Are online customers more or less profitable than offline customers? By how

much? Please provide arguments.

c) (4%)Are customers in some districts more or less profitable than in others? By

how much? Please provide arguments.

d) (4%)Estimate the profit of a customer who has been with the bank for 15 years,

lives in the 210 district, and uses the online services of the bank. Comment on your

findings.

e) (3%)If the Fjalla bank was keen on continuing with this analysis what would you

suggest as the next step?

Data set: https://docs.google.com/spreadsheets/d/1-hmd8djyYHOPluYQKp8hR7G_zCW4Cvqv/edit?usp=sharing&ouid=104637789830381662768&rtpof=true&sd=true