ShareRetail Banking: Future is NOW!
Imagine you are at the grocery. You buy fruits from one vendor, vegetables from another, dry goods from another, and so on. You negotiate pricing with each vendor and depending on the volume you are purchasing and your negotiating skills you get special discounts or favorable pricing from each vendor. Regardless of how much you buy in aggregate from the bazaar, each vendor’s price to you is based only on how much you buy from that vendor.
Luckily, this is not how we buy groceries; the grocery store provides us a one-stop-shop for buying all the things we need and a single counter to pay for all that we buy.
Unfortunately, shopping for our financial needs like loans, mortgages, credit cards and basic banking services is still the same as going to a product-centric bazaar where we have to negotiate with each product provider separately.
Like today’s grocery store, retail banks are in a strategically advantageous position to break-away from their product-centric competitors and offer their customers truly integrated, end-to-end service. Thanks to the availability of a leading-edge technology, Relationship-based Pricing, RBP in short, retail banks can cut across product silos to provide a holistic customer-centric view of the customer’s business and value to the bank, helping identify the bank’s more profitable customers. Armed with this ‘complete customer view’, the bank can create the right product bundles, pricing strategies, and discount and loyalty programs to consistently win and retain high-value customers in an increasingly commodity market.
A case in point is one of the largest banks in the world. The bank, using Relationship-based Pricing has devised an extremely customer focused loyalty-reward model. This bank runs a relationship loyalty program that grants loyalty points for a broad array of accounts and activity, including deposits, cards and even mortgages. The products and services include: Checking Account, Checking Plus, Savings/Money Market, CD Debit card, Online Bill Payment, Direct Deposit, Ready credit, Personal Loan, Home Equity Line, Home Equity Loan and Mortgage.
The customer can select any combination of the above mentioned products to make a package on his own. Now for each package, bank varies reward points available to a customer based on the number and nature of products and account activities. Each month, based on the actual usage of various products in the package, reward points get accumulated in each customer account. These points, accumulated over a period of time, can be redeemed for services or merchandise selected by the customer. The customer finally gets a single statement for all the services used, something similar to the one that he would at his local grocery store.
And if you thought all this would happen to retail banking in future. Future is now!