The Bankwatch

Tracking the consumer evolution of financial services

Considering bundled pricing for bank services | Deloitte

A new paper from Deloitte explores the potential of banks shifting pricing methodology to bundled pricing using relationship pricing models.  It recognises the distinctions between telco’s who have long used this model and banks but feels its worth exploring. 

The next revolution in retail financial services marketing? | Deloitte

Relationship-based pricing is a system of pricing whereby the prices or products and services depend on an individual or household’s overall product and service purchases rather than being determined on a product-by-product basis (i.e., overall purchase levels do not impact individual product level pricing).

The goals of relationship pricing include:

  • Attracting new customers who otherwise might not have made a purchase
  • Expanding the breadth of products and services provided to existing customers
  • Retaining existing customers when competitors offer similar relationship pricing programs

Relevance to Bankwatch:

Banking pricing and bank products are long overdue for a change.  The change needs to catch up with how people think and what people need in this post recession, deleveraging environment.  Options that aggregate services and enhance loyalty through use of more services ought to be a good thing.

Written by Colin Henderson

May 25, 2010 at 14:42

Posted in Uncategorized

3 Responses

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  1. One of the main challenges for relationship-based pricing is not to be perceived as tied selling. In this context, relationship-based pricing may have a serious impact on single product providers in the financial space. In Canada, we should be asking the question of whether we have a sufficiently robust competitive environment for consumers to realize the potential benefits of this. Finally, this once again ratchets up the technology race — will present Big 5 Bank core systems be able to handle this?

    Rob Burbach

    May 26, 2010 at 06:23

  2. Rob .. good point about tied selling. Bundling would have to be carefully designed so as to ensure that did not occur. The technology problems would be a real test for banks in Canada. Disparate systems that do not easily communicate with each other would present many new challenges.

    Colin Henderson

    May 26, 2010 at 12:39

  3. Colin, another important benefit of RBP we frequently see is to enable the bank to present a single view of the bank to the customer. Cutting across the silos gives a single view of the relationship, in addition it also enables the bank to increase the customer experience. By consolidating products, customer better understands his relationship value, hence giving him more control and better bargaining power.

    prashanth bhat

    June 17, 2010 at 05:10

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