Pricing and Billing Improvements: A Path to Bank Profitability
A new report from Aite Group discusses the value of improved pricing and billing functions for banks servicing commercial customers. Based on data aggregated from a number of Aite Group surveys of banks and end users, the report suggests that pricing and billing, when used correctly, can transcend operational functionality to become a marketing and sales tool and a means to improve a bank’s profitability while building client commitment to the bank.
Banks tend to measure profit and loss on specific products and lines of business. Few banks know the value of individual business customers to their bank’s overall earnings, and seldom are banks able to recognise clients whose overall relationship with the bank makes that client especially important. Even fewer banks know how to increase the value of a given customer relationship with the bank – what products and services to cross- or up-sell, which product bundles will appeal to a client, how to maximise revenue from product bundles, and which clients, products, and services command premium pricing.
The right pricing and billing system, however, will provide a bank with the ability to determine how to best bundle products and services, differentiate pricing, improve customer service, and calculate the profitability of each customer relationship. Over time, banks that implement such a system will increasingly respond to requests for proposals with bundled products and services.
“Pricing and billing have moved beyond counting transactions and applying set prices, and have become tools for strategy creation,” said Nancy Atkinson, senior analyst with Aite Group and author of this report. “Automated pricing and billing systems offer the capabilities banks need to make strong decisions regarding the prices they quote for products and services.”