Look Before You Leap: Analyze Customer and Business Impact Carefully Before Implementing Product Changes

February 2012
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Look Before You Leap: Analyze Customer and Business Impact Carefully Before Implementing Product Changes

At a glance

New regulations are forcing financial institutions to re-examine their mix of businesses. This presents banks with a unique opportunity to modify their approaches to examining and balancing their customer and product portfolios. PwC suggests a framework that aligns a firm’s customer priorities with the management of capital, funding, and risk.

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New regulations are forcing financial institutions to re-examine their mix of businesses. This presents institutions with a unique opportunity to modify their approaches to examining and balancing their customer and product portfolios. PwC recommends an “end to end” framework that aligns a firm’s customer experience priorities with the management of capital, funding, and risk. Winning firms link finance and risk insights through customer and product analysis.

As currently drafted, Basel III and Dodd-Frank will increase the cost of doing business, while reducing profit margins and returns on equity. Given the pressure from external stakeholders (such as regulators and investors), key capital, funding, and risk management decisions are being made without sufficient consideration of the long-term implications to the customer experience. Aggravating this condition, clients have grown more sophisticated while cross-selling has grown more important.

Leaders are implementing an integrated approach to managing the dynamic between customer impact, product portfolios, and pricing. The strategic framework should include customer experience, product profiles, likely competitor reactions and expected impact on capital requirements, liquidity, and earnings.