PREMIUM – Add another #challenger #bank to the mix, this time in Eastern Europe. Polish bank #Alior is working on launching a digital-first bank later this year, Bank Innovation has learned. Alior Bank, headquartered in Warsaw, was founded in 2008 and has more than 3 million customers, 216 branches, 219 high-tech mini branches that it […]
Bank Innovation
Emerging markets payments platform #PayU is building an in-house data science team. The company’s latest rounds of investment and acquisitions pointed to something big, and this seems to be part of it. For instance, late last year PayU’S parent company Naspers invested $ 115 million in remittance startup Remitly. This was preceded by a €110 million ($ 127.8 […]
Bank Innovation
PREMIUM — APIs — application programming interfaces — are still in their early days in banking, but are starting to show their promise. Data is flowing from your account to third party service providers in your mobile device and beyond, so you are never far away from knowing how much money you don’t have. APIs […]
Bank Innovation
17 percent of US banking revenue now comes from truly #digital banking relationships
Modern metal starting blocks for sprinting—complete with offset footrests—first appeared at the 1948 London Olympics. This innovation both reinforced the benefit of a crouching start position and also signaled the end of athletes digging holes for their toes in the dirt to get a solid foundation to push off of. It demonstrated that when something truly new comes along, it can make the old ways immediately obsolescent.
After years of hype, but little real change, we are now seeing the truly new arrive in US banking, and it is beginning to make the old business model look obsolete. Accenture research shows that 17 percent of US banking revenue now comes from truly digital banking relationships and that number is increasing quickly.
In response, most incumbent US #banks will likely default to trying to be a better version of themselves and adopt a digital relationship management business model that seeks to be most things to most customers, and relies on a mix of fees and balance sheet spreads for income. As digital advice and increased efficiency squeeze fees, more attention is going to focus on net interest margin, particularly in a rising rate environment, where there will be increased competition for both assets and liabilities. As we enter this transition it begs the question, “How #well does your #pricing #strategy fit the digital #economy?”
It’s a question more than 80 banking executives in North America explored through dialogue and demonstrations at the recent Banking Growth Forum 2018 jointly hosted by Accenture and our partner, Nomis Solutions. We concluded that a product orientation when it comes to pricing will no longer drive success in the world of truly digital economy. Instead, building and delivering a true digital relationship manager strategy will mean a level of pricing sophistication that is challenging for most banks.
The fact is that many banks are culturally and organisationally tethered to product-based pricing, as it fits easily with banks’ traditional internal organisation and allows effective aggregate balance sheet management. Yet, it is also limited when it comes to optimising margins and truly differentiating the customer proposition—two key elements of running a successful digital relationship manager business model.
Even in setting simple cross-sell pricing, banks need to utilise a customer profit view to target the retention of their most profitable customers. And while cross-selling usually gives customers some choices like product packages or a rewards wrapper, it is still based on selling products. True relationship pricing on the other hand requires sophisticated lifetime value analysis to shape decisions, drawing on vast stores of customer and transaction data to offer the right product at the right price through the customer’s preferred channel. Rather than products sold, it hinges on promises delivered, backed by accountability, transparency and explainability—a notion that typically runs contrary to the traditional organisational structures of banks.
As industry change accelerates, banks will need to offer something genuinely new in their pricing. Those that will thrive will enhance their existing capabilities to advance along the pricing and offer management maturity journey—pivoting from a product focus to a real-time, intelligent, customer-relevant, promise-centered approach. That will be a strong foundation on which banks will be able to sprint forward and remain competitive.
For more on this topic, I invite you to read our report, Ready, Set, Next: A Guide for Banks in Advancing to In-The-Moment Pricing
The post How well does your bank’s pricing strategy fit the digital economy? appeared first on Accenture Banking Blog.
Social payments platform #Venmo is phasing out certain #functionality on its #website, venmo.com, including allowing people to make payments there. Wait, what? “Over time you may see less functionality on the website – this is just the start….venmo.com website may be limited,” Venmo notified some of its customers through email today. The change might seem [&8230;]
Bank Innovation
#Royal #Bank of #Canada and #Facebook today offered differing versions of why the social media company continued to give the bank extraordinary #access to customer #data after Facebook said publicly that it would stop doing so. RBC said Facebook allowed it access in order to “wind down” a payments app it first unveiled in 2013. […]
Bank Innovation
PREMIUM — What do Under Armour and Apple’s Beats by Dre have in common? Talent has been recruited from both companies to kick-start a #bank that’s a non-bank. “We don’t want to call ourselves a ‘bank’; we want to be called Cogni,” said Archie Ravishankar CEO of Cogni. “Cogni meaning cognizance, intelligence, smart and relieving […]
Bank Innovation
PREMIUM – #Digital channels will play a larger role in increasing #Bank of America’s deposit growth, a key part of the bank’s business strategy. Currently, 26% of BofA’s #sales #come from its digital front, but according to Dean Athanasia, president of consumer & small business at BofA, the #goal is to drive that number up […]
Bank Innovation
PREMIUM – Millennials have Venmo, #banks have #Zelle, but what’s the P2P payments preference for #credit #unions? It’s not that credit unions cannot connect to the bank-backed (and bank-owned) payments system that is Zelle. In fact, credit unions like America First Credit Union and Mountain America Federal Credit Union are already connected to Zelle’s platform. […]
Bank Innovation
81% of mobile customers use notifications and alerts in their mobile banking apps. The majority of these will be transactional and #service oriented in nature, which notify individuals about a variety of important happenings in relation to their accounts, at the moments that matter. For instance: a low balance alert, unusual account activity, new statements […]
Bank Innovation
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