This paper speaks about why and how bank products have certain prices and shows banks how to price products better. The main finding of our survey was that banks’ price setting techniques are still very basic throughout Europe.
In the paper we try to bring some ideas forward, in order to address this issue:
- Focus on customer characteristics that influence risk, usage, cross-sell and price-elasticity
- Create pricing teams that act as advisers to those who set prices
- Extend the pricing discretion of sales staff in the products where ticket size and price elasticity warrant it, while disciplining them with incentive payments that vary with price realization
