Don’t let the short-term economic uncertainty disrupt your near-term growth. Winning banks, lenders, and credit unions will make the most of every moment by not guessing what their next move is - but knowing.
Gain an unfair advantage in an increasingly uneven playing field
Take a frenzied Presidential election season and throw in COVID-19, a fast-spreading virus on the verge of turning into a global pandemic. And we have a perfectly potent recipe to whipsaw both markets and consumer confidence. As I write this, the S&P 500 has fallen 15% from its Feb 19 high, ^VIX, the CBOE Volatility Index, has quadrupled, the 10 Year T-bill has dipped below 1%, mortgage refis are going through the roof and the Fed has cut rate by 50 bps to calm jittery markets. Tokyo is reconsidering the timing of the 2020 Olympic Games. Italy is on lockdown. And my local CVS is rationing hand sanitizers!
Whew! OK. Let’s all take a collective deep breath. And wash our hands for the recommended 20 seconds. While the impact of COVID-19 can’t be understated, I do believe that both the virus and the associated uncertainty will eventually pass.
Unfortunately, there are larger trends playing out in the Financial Services landscape that will be harder to ignore or mitigate, stressing all but the largest of retail banks and lenders. Take but two examples. Moynihan, Bank of America’s CEO recently stated his desire to see BAC double its consumer deposits market share. For those of you keeping track, that’s roughly equivalent to deposits held at 3000 small banks. On the asset side, digitally savvy mortgage lenders like Quicken, LoanDepot and Better are bringing immense amounts of automation and intelligence to take market share from traditional incumbents.
As an executive at a mid-sized Financial Services institution, more than COVID-19, I’d be worried about these existential threats that are reshaping the playing field. What do you do when you only have a fraction of the market share, distribution, digital depth and resources of your largest competitors? You focus. You innovate. And you change the game.
The new landscape needs a new paradigm
Competing effectively and winning in this new landscape will require a new paradigm, supported by a set of new innovative capabilities. And this will be even more true for pricing, which is at the heart of the value exchange with your customers and your own growth.
Going forward, those who win will get three things right with their approach to pricing:
- PERSONAL & PROFITABLE – Start with the customer’s POV: Pricing needs to be grounded in your customer’s view of value as much as yours. This goes for both how you create value and how you charge for it. We continue to see far too many institutions still using cost-plus approaches and failing to capture their full potential. Do you understand what your customer’s really value? Do you understand what they are willing to pay for it? And do you know how profitable they are? Winning institutions, increasingly, do.
- PRECISE - Move beyond the average: To outperform the average, you need to think and act beyond aggregates and averages. Many institutions have moved to broad regional or segmented pricing strategies, a step in the right direction. But even a small bank or lender operating in just two states, has dozens of distinct geographies and hundreds of thousands of customers. Do you understand the deposits opportunity or demand in a geography? Do you know how one customer’s sensitivity differs from the next? Winning institutions understand their regions, segments and consumers quantitatively, at the most precise level possible and put that intelligence to work for them.
- AGILE - Know and act “in the moment”: Predicting the exact moment your customer is willing to engage with you is nearly impossible. And with the advent of digital, that moment could be anytime, making every moment the moment of truth. Can you see from a customer’s vantage point, in real-time, as they shop? Do you understand the competitive landscape in the moment that matters? And can you act on it? Leading institutions are embracing the speed and agility required to both know and act.
Engineering this paradigm shift will require an entirely new set of intelligent, data-driven capabilities. Capabilities that first or even second-generation pricing solutions have not delivered on yet. And capabilities that have often been out of reach for everyone but the largest institutions. Starting today, we are changing all of that!
Introducing Nomis Mortgage – Real-time Intelligence & Insights
For the past several months, a dedicated team of Nomistas – banking experts, pricing geeks, data scientists and engineers - has been hard at work tackling this challenge. Building a set of capabilities that enable you to understand the customer’s POV, move beyond averages and understand market dynamics in the moment-of-truth.
I am incredibly excited to announce the launch of Nomis Mortgage (in beta, limited to US customers), the first of this new suite of capabilities and the latest addition to the Nomis Platform.
Nomis Mortgage ushers this shift by delivering unprecedented intelligence and insights, ie., the quantified, granular understanding of customers and markets in real-time that you need to make smarter decisions.
Insights that allows you to be more PERSONAL & PROFITABLE by being more PRECISE and AGILE.
With dedicated modules for Retail Deposits and Mortgage, Nomis Mortgage adds customer and real-time market intelligence to the optimization (nPO), presentment (nDM) and execution (nPM) capabilities present in the platform today.
The interest in Nomis Mortgage from banks and lenders of all sizes has been tremendous. Five customers have signed up pre-launch with several others in flight, re-affirming our belief that the status-quo no longer works, and a new approach is desperately needed. We are excited, honored and humbled to be on this journey with all of you game-changers. Much work remains. So, we’ll get back to it!
If you are a Banking or Mortgage leader, learn more about Nomis Mortgage and start a free trial to see if it makes sense for your institution. It’ll not help you with COVID-19, but it can certainly help you compete better in what is an increasingly uneven playing field.