Win-win banking: Unlocking value through advanced product, pricing, and billing
This content has been created by the Finextra editorial team with inputs from subject matter experts at the funding sponsor.
In today's fast-moving and hyper-competitive retail banking ecosystem, product and pricing agility is no longer a luxury for financial institutions: it is now a necessity. Innovation-first challengers, evolving customer expectations, and regulatory pressures have forced banks to rethink how they design, price, and deliver products.
Advanced product, pricing, and billing capabilities are crucial for modern retail banks to overcome complex product management challenges, rigid pricing, and fragmented billing. Optimised product management, dynamic pricing and centralised billing allows retail banks to rapidly design, price, and deliver innovative and hyper-personalised products at scale.
The result is a win-win: banks gain agility, better revenue control, and growth opportunities, while customers receive relevant products at attractive prices, greater transparency, and better rewards.
Evolving market demands
Today's retail banking market demands agile, customer-centric solutions that prioritise personalisation, transparency, and flexibility. Looking to the future, these demands will intensify as digital-native customers expect seamless experiences, innovative offerings, and value-driven interactions.
Hyper-personalisation and value: Today's customers expect financial products aligned with their unique financial goals and lifestyles - from low-fee student accounts to high-yield savings for young professionals. There is a strong demand for convenient, cost-saving bundled offerings such as mortgage and insurance packages or credit cards with travel rewards. Looking ahead, this trend will accelerate into hyper-personalised products, that leverage AI-driven insights to create bespoke solutions at a micro-segment or individual level. This could mean dynamic, usage-based bundles that adjust features or pricing in real-time based on customer behaviour.
Dynamic and transparent pricing: Customers are increasingly demanding dynamic and transparent pricing with no hidden fees. They expect benefits like lower interest rates or waived fees that reward their overall relationship and loyalty. This push for relationship-based pricing considers factors such as account types, balances, relationship length, and activity. Looking ahead, AI will increasingly influence or drive pricing models making relationship-based pricing even more sophisticated by analysing predictive behaviours for hyper-personalised offers with real-time adjustments.
Streamlined and flexible billing: There is a growing market demand for flexible billing options, including usage-based models and tiered services that reward customer engagement. Looking ahead, the expectation will evolve into seamless and transparent billing systems that integrate across all products, providing a single, real-time view of charges and rewards.
Customers today and in the future value being rewarded for their loyalty. Banks are expected to deepen these relationships through effective cross-selling and bundling, tiered programmes offering premium services and attractive pricing, all aimed at encouraging customers to consolidate their financial services for better overall value.
Why conventional capabilities fall short
Banks today face a critical imperative: adapt to the demands of modern business needs. The reality is banks can no longer ignore critical capabilities that help them manage the intricate web of today's product management, dynamic pricing and offers, and diverse billing structures. The lack of these critical capabilities can create significant roadblocks. They cannot accommodate diverse contract structures and nuanced pricing models that are essential in a highly competitive market. This inflexibility directly impacts a bank's ability to innovate, respond to market shifts, and capitalise on evolving customer expectations.
Rigid product management: Complex or hard-coded product definitions for loans or savings with distinct data structures pose significant challenges. Inconsistent product offerings can confuse customers and bank staff, while portfolio bloat from outdated or redundant products increases costs. Additionally, rigid systems with poor interoperability limit innovation by hindering experimentation with new features or integration with third-party partners or ecosystems.
Complex or hard-coded product definitions for loans or savings with distinct data structures pose significant challenges. Inconsistent product offerings can confuse customers and bank staff, while portfolio bloat from outdated or redundant products increases costs. Additionally, rigid systems with poor interoperability limit innovation by hindering experimentation with new features or integration with third-party partners or ecosystems. Inflexible pricing structures: Inflexible pricing rules create rigid and inconsistent pricing models, making dynamic or personalised pricing challenging. Banks also struggle to tailor pricing to customer segments, behaviours, or overall lifetime value. Adjusting pricing to respond to market trends or competitor offerings is slow and complex.
Inflexible pricing rules create rigid and inconsistent pricing models, making dynamic or personalised pricing challenging. Banks also struggle to tailor pricing to customer segments, behaviours, or overall lifetime value. Adjusting pricing to respond to market trends or competitor offerings is slow and complex. Inefficient and opaque billing processes: Siloed billing or applying inconsistent fee structures, complicated consolidated billing, and transparency. This leads to a negative customer experience or even attrition due to opaque or unexpected fees, eroding trust. Disparate systems also cause revenue leakage through difficulties in tracking and reconciling fees. The lack of a holistic view of customer activity prevents relationship-based billing. Reconciling billing data across systems is labour-intensive, increasing operational costs.
Siloed billing or applying inconsistent fee structures, complicated consolidated billing, and transparency. This leads to a negative customer experience or even attrition due to opaque or unexpected fees, eroding trust. Disparate systems also cause revenue leakage through difficulties in tracking and reconciling fees. The lack of a holistic view of customer activity prevents relationship-based billing. Reconciling billing data across systems is labour-intensive, increasing operational costs. Scalability challenges: Traditional systems often lack the scalability to handle high transaction volumes or new product lines, leading to performance issues and downtime.
Driving innovation with advanced product, pricing and billing capabilities
Advanced product, pricing, and billing capabilities can help power innovation and future-proof a bank. Banks can roll out new and innovative products, promotions, or pricing models more rapidly without the need for extensive and time-consuming overhauls of their existing systems.
Banks can create dynamic and compelling bundled offerings, significantly aiding customer acquisition and retention. These bundles can take various forms, including cross-product packages (e.g., mortgage, insurance, and loyalty programme), lifestyle-based bundles tailored to demographics (e.g., student accounts with travel rewards), tiered services for premium customers, and dynamic usage-based bundles that adjust based on customer activity.
With the right pricing capabilities, banks can quickly adapt to market changes, customer demands, or regulatory requirements. Dynamic pricing strategies based on various factors like customer segments, behavioural patterns, or lifetime value help offer new value to customers and establish competitive advantages. Relationship pricing can be elevated with tiered programmes, product bundling that incentivises multi-product usage, and personalised offers.
Streamlined billing helps banks eliminate revenue leakage. Integration with existing CRM, ERP, and accounting systems, helps provide a unified view of customer data and sales processes. With quote creation, pricing calculations, and offer management being automated, sales teams can dedicate time to close deals and manage customer relationships. This improves customer experiences and allows banks to adapt and scale.
The data and AI advantage
Key considerations when evaluating solutions with advanced product, pricing and billing capabilities include seamless integration with existing bank systems through robust APIs and data synchronisation. A well-defined data migration strategy for accurate and complete data transfer, supported by strong governance and security is essential. Solutions must also be highly scalable and performant to handle the bank's full transaction volume with low latency, while strictly adhering to all relevant compliance regulations.
AI can help banks identify profitable segments, understand customer needs, and predict future behaviour, leading to the creation of more relevant and personalised products. For pricing, AI can facilitate dynamic strategies by analysing demand, competition, and customer willingness to pay.
A win-win: What is in it for banks and customers?
Faster time-to-market: Banks can roll out new products, promotions, or pricing models more rapidly.
Personalisation: Advanced capabilities make it easier to implement dynamic, customer-specific pricing, or tailored billing models, enhancing customer experience and competitiveness.
Flexibility and agility: Banks can quickly adapt pricing and billing structures to market changes, customer demands, or regulatory requirements.
Improved portfolio analysis: Banks can collect and analyse granular data on pricing, billing, and product performance.
Dynamic product adjustments: Banks can experiment with pricing models, bundling strategies, or new product features.
Customer-centric optimisation: Banks can better align their product portfolio with customer needs by leveraging data to design personalised or segmented offerings.
Streamlined rationalisation: Banks can rationalise and optimise complex product portfolios by reconfiguring or discontinuing products reducing costs and risks.
Scalability: Solutions that scale across the banking enterprise can more easily handle increased volumes or new product lines.
Innovation enablement: Easier integration can power innovation in product offerings and enable partnerships with fintechs or other third parties.
A strategic imperative for the future
Advanced product, pricing, and billing capabilities help banks move beyond a one-size-fits-all approach. Granular product definitions, flexible pricing, targeted offer creation, and precise billing help banks tailor offerings to specific customer segments' needs and preferences. In a digital-first world, where expectations are measured in milliseconds and loyalty is won through experience, such capabilities are not just an operational upgrade, it is a strategic imperative.
Retail banks that embrace these capabilities are positioning themselves to thrive amid disruption. Those that do not risk being outpaced by nimble competitors who build with agility at their core. As customer expectations rise and the pace of innovation accelerates, banks must rethink what it means to be product-driven. The answer is data and dynamic personalisation. And advanced product, pricing and billing capabilities are how modern retail banks get there.
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