The Price of Success: Aligning Bank Pricing Strategy with the Customer Value Proposition

March 2012
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The Price of Success: Aligning Pricing with the Customer Value Proposition

At a glance

Today, bank pricing strategy needs to take into account how different customers value their products and services. A PwC white paper and video.

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Today, bank pricing strategy needs to align with how different customers value their products and services. Banks should replace traditional pricing with a holistic data driven approach that includes customers’ needs, preferences, behaviors, purchasing patterns, and price sensitivity.

A data-driven, holistic bank pricing strategy creates more (and faster) value than banks can yield from reductions in variable and fixed costs, or from increases in volume. Research has shown that a 1% improvement in pricing will have 1.5 to 4.5 times the margin impact of a 1% cost improvement. Moreover, between 1% and 5% of value is lost across all industries because companies do not know enough about their customers’ willingness to pay, or do not have the ability to profit from this knowledge. With such profit leverage, pricing is one function that a company can always improve.

Banks that develop a data-driven, customer-focused bank pricing strategy are better positioned to use pricing as a competitive advantage across market and customer segments, as well as the entire portfolio of deposit, lending, and transaction products and services.