Although pricing is one of the most effective ways to impact performance, it is dramatically underutilized by most banks and finance companies today. With unprecedented turmoil in the marketplace, executives are trying to optimize both sides of the balance sheet — loan originations and deposit balances — to maximize net interest margins and meet their funding goals.

During this time, pricing as a discipline has increased in importance, elevating it from a tactical function to a strategic lever that can foster ongoing learning and improvement. Smart executives have begun investing in best-in-class pricing and profitability management to break through the current market conditions and prepare themselves for the future.

What’s Missing from Most Pricing Practices and Processes?
Most banks and finance companies use one or a combination of the following approaches to guide pricing decisions and determine buy rates and fees:

Approach Explanation Drawbacks Cost or Risk-based pricing Rates and fees are set based on cost (costs of funds plus risk and a fixed margin) This approach ignores competitive pricing and different price responses of various customer segments Market-based pricing Rates and fees are set based on competitor prices Disregards the value the customer places on the brand and the product and the profitability of the loan Anecdote-based pricing Prices are set based on instinct and rule-of-thumb Disregards the current environment and competitive realities

These approaches fail to take into account a critical factor: the dealer's and/or customer's price response. Best-in-class pricing and profitability management replaces these ad-hoc approaches with advanced analytics, innovative technology and tailored business practices and processes.

The Nomis Solutions Pricing and Profitability Management Suite™
The Nomis Solutions Pricing and Profitability Management Suite capitalizes on Nomis Solutions’ domain expertise within retail banking and auto finance. The following integrated solutions comprise the Pricing and Profitability Suite:

• Nomis Navigator™: Designed specifically for senior management responsible for one product, a line of business with multiple products, or multiple lines of business, the Nomis Navigator is an executive dashboard that provides enhanced visibility into critical banking metrics for auto finance companies.
• Nomis Price Optimizer™: Created for executives responsible for pricing loan and deposit products who want to capitalize on strategic pricing to drive financial performance from the portfolio down to the micro-segment level. .
• Customer Portfolio Optimizer™: Developed for mortgage executives that are responsible for managing the existing customer portfolio and achieving profit goals, asset targets, and return on equity objectives.
• Nomis Offer Optimizer™: Built for credit analysts that engage in deal-by-deal negotiations and want to customize offers to meet the needs of the auto finance company, the Finance & Insurance Manager, and end-consumer.

Contact us today to learn how we can help you achieve similar results.