Interview Questions › Root Cause Analysis

Digital bank: Active users, tx volume, and cross-sell all worsened

Your digital bank experienced simultaneous degradation across 3 core pillars over the last 2 quarters: Monthly Active Transacting Users (-12%), Total Deposit Volume (-18%), and Cross-Sell to Personal Loans/Investments (-30%). Perform a holistic root cause analysis.

Context

New account sign-ups remain strong due to marketing incentives, but customers are treating the app as a temporary secondary account rather than their primary bank.

Clarifying questions to ask first

• Did users withdraw deposits to move them to traditional high-yield accounts?
• Did credit risk models tighten loan approvals due to rising defaults?

How to approach it

1. Investigate Primary Banking Relationship (PBR) drivers: Direct salary deposits, recurring bill payments, debit card daily spend
2. Analyze interest rate competitiveness vs incumbent banks in a high-interest-rate environment
3. Examine credit underwriting tightening and personal loan approval rate reductions
4. Propose a multi-stage turnaround strategy to reclaim primary wallet share

Framework: Primary Banking Relationship (PBR) Health -> Macro Interest Rate Dynamics -> Credit Risk & Approval Policies -> Retention & Loyalty Hooks

Sample answer

• Central bank interest rate hikes made incumbent banks' fixed deposits more attractive than 0% digital balances
• Stricter automated credit scoring slashed personal loan approvals by 45%
• Lack of direct salary deposit incentives caused users to transfer money out on payday

1. Root cause synthesis: High interest rates caused affluent depositors to chase yield elsewhere, while tightened credit scoring rejected creditworthy users from taking loans, destroying primary engagement

Loss of Primary Banking status due to uncompetitive deposit yield and opaque loan underwriting; launched automated high-yield savings pots and salary-advance credit tiers to rebuild primary account stickiness.

What interviewers look for

• Primary Banking Relationship (PBR) %
• Salary Deposit Penetration
• Credit Underwriting Approval Rate
• Cost of Funds vs Net Interest Margin