Pricing is something we at Nomis are deeply passionate about. Pricing is also at the heart of how you manage risk, exchange value with your customers and drive sustained, profitable growth. So, earlier this year, we partnered with American Banker to poll nearly 160 bankers and lenders to learn about their pricing journeys. Our respondents were director-level or above with deposits and loans lines of responsibility who worked in product management, retail banking, analytics, or pricing. In other words, these are the people who define and implement products and pricing. We asked them about the role that pricing plays in their overall success, how they rate the sophistication of their pricing strategy, and how effective they are in adapting their organization to a pricing-centric approach.
But just as were going to publish the results, COVID-19 hit and upended the industry. Branches closed, forcing a hasty acceleration of digital distribution. Interest Rates went down to zero, evaporating interest income streams. And Deposits fled to safety, creating excess but unproductive liquidity as Lending slowed to a crawl. The industry refocused on serving their customers more than selling. And with revenues and budgets impacted, doing more with less.
While some of these disruptions are temporary, others I believe, will be more long-lasting. So, as economies and the industry chart their paths to recovery, we took a step back to think about how banking and pricing will be impacted. And we went back to your survey responses and found them to be prescient, even in this “new normal”. As Banks and Lenders are asked to do more with less, there are three themes from the research that clearly stood out:
American Banker Pricing Optimization Study Themes to Consider
- CUSTOMER-CENTRIC: Customer-centric will be the key to differentiation. Over two-thirds of the respondents believe that pricing will be a key success factor for their institutions. But with near-zero interest rates making broad rate offers untenable, the banks and lenders that win will both dig deeper to personalize pricing to customer’s sensitivities and motivations, but also take a more holistic, customer-centric view of offers to acquire customers and maintain loyalty.
- DATA-DRIVEN: Better data will unlock the next level of pricing analytics. Nearly nine out of ten respondents feel that they have a handle on pricing analytics. But while pricing analytics has matured, data—the fuel for analytics—has been left behind. The quest for better data (in real time and in context as made possible by products like nSight) is paramount, especially during times of uncertainty and we believe can unlock the next level of analytics.
- DIGITIZED: Intelligent, agile, digitization will beat slow-moving strategy. Institutions of all sizes are struggling to deliver personalized pricing and offers quickly, and survey respondents cite this as their biggest challenge. Pricing and offers remain trapped in rigid systems and risky, manual processes. Something that banks and lenders can ill-afford, especially in the era of “do more with less”. We believe that intelligent digitization is the way out. Digitization that infuses the process with data-driven intelligence, without leaving your front-line bankers and lenders out of the loop. A problem now effectively solved by modern, end-to-end pricing platforms.
There’s a lot more to unpack in the research. So, take a look, see how you stack up and use it to push you pricing digitization forward to deliver more with less in 2021. Download the American Banker 2020 Pricing Optimization study now.