Financial institutions are going through a tough time. Heavy competition, product commoditization, increasing regulatory burdens and increased demand from customers are urging banks to look for new avenues for organic growth. This has brought about a shift from the traditional product-centric strategy to customer-centric strategy, giving prime importance to their customer relationships.

With fluctuating interest and investment revenues and significant erosion in profit margins, the revenue models of the financial institutions have gone in for a drastic change, hoisting fee income into the limelight. Fee-based services contribute to consistent revenue growth even in tough economic times.

While technological advancements are skyrocketing, many banks are still using their legacy systems with manual and semi-automated processes which restrict the banks from executing customer-centric strategies. Innovative banks are fast embracing technology and using it as their competitive advantage.

Bringing together the three biggest needs of today’s banking industry - a customer centric strategy, need for more fee income and technological advancement, is Relationship-based Pricing (RBP). Relationship-based Pricing enables banks to shift from product-centric to customer-centric strategy ensuring increased fee income through technological advancement.

Traditional Telcos, large cable companies and even smaller wireline and wireless operators are all wanting to banking on content services, faced with declining ARPU and increasing customer attrition. Traditionally the operators have complete control over any service rolled out to their customers. But things started to backfire with content services, may be because of some unique features of content services. As operators started to roll-out content services to their customers, they began to charge these services in an adhoc manner. On one side many telcos and MSOs faced accusation for allegedly charging their content service offerings, and on the other they started to lose revenue every year due to outdated billing systems.

Operators, understanding the need to accurately bill these new services for their customers are increasing seeking support from the content aggregators/providers. This means that the aggregators are taking on the responsibility to not only sustain relationships with the right content owners and showcase attractive content services, but also to act as a technology enabler for delivering these services. They have to support these high value and high volume content transactions, charge them as per content type and other attributes as well as settle the revenue and bill for both sides of value chain – the service providers and the content owners.

Content providers/aggregators need to have the right system in place and not to let them be taken for a ride with settlement statements generated from the operator. This content demand is to be leveraged and to be tapped by making themselves truly innovative and attractive to operators. Only if the operators see that they can be hassle-free for launching the content services, will the content provider/aggregator be a choice for the operator. By being equipped with content provisioning, pricing, billing and settlement system, makes the content provider/aggregator attractive. Also advanced features for packaging the services and providing loyalty programs for content partners and operators helps the content provider/aggregator to remain competitive.

Now since the communication products are mostly commoditized, it is very important for a communication service provider to find out different means to differentiate in the market and win customer share. It could be based on quality of customer services, network coverage, but among them, pricing is turning out to be an important differentiator.

Faced with hurdles such as tough competition and zooming fuel costs, utilities service providers are looking for better revenue, in order to survive and sustain.

But how to ensure better revenue, when the price pressure is getting higher due to either competition or regulation? The answer is simple — Listen to your meters!

You heard it right! By ‘listening to your meters’ through the proper utilization of the new Automated Meter Reading technology, you can achieve better ends than just billing the consumption amount. Here are some day-to-day situations you might be facing as a service provider:

Do you have to pay the grid through your nose for peak-time consumption? Your AMR system can come to your aid, by getting interval meter reads; a meter data management (MDM) system can process this data, so that you can apply differentiated rates for peak and off-peak hour usage. The price advantage is sure to tempt your customers to shift some of their usage towards off-peak timings, so that your peak load remains manageable.

Does tampering rob you off your hard-earned revenue? Don’t lose heart! The usage pattern analysis functionality in an MDM system, enabled by AMR, can effectively detect any attempt to tamper your network. And of course, your fraud management system will do the rest!

Are undetected outages a cause of concern for you? The outage analysis system in MDM can analyze your AMR interval readings and detect outages promptly. Your outage management systems can take on from there and invoke corrective action. Further, the MDM can monitor the effectiveness of the corrective action done in the network.

Have you started feeling the need to plan for the future, aiming at better revenues? The MDM system has several analytical features that enable you to analyze meter data and generate reports for the future. Usage analysis and reporting, load forecasting, energy accounting and auditing… these are only some such tools that can help you make informed management decisions, for the future and for a better tomorrow.

Still, there is a lot more waiting to happen in the metering realm. The question is, have you geared up for the next generation of metering?

Believed to be the communication industry’s most far-reaching BSS impacting technology, IMS radically changes the paradigm of how subscriber usage is collected, managed, rated and billed. By bringing services and functions together from disparate network technologies and elements, IMS facilitates the optimization of real-time seamless interactions between services and functions. Thus IMS-enabled strategic advantage is the ability to quickly deliver bundled and blended services, which will attract and retain more subscribers looking for service personalization, quality, and value seamlessly and independently across networks.

IMS provides a framework for the deployment of both basic calling services and enhanced services, including multimedia messaging, web integration, presence-based services and push-to-talk. At the same time, it draws on the traditional telecommunications experience of guaranteed QoS, flexible charging mechanisms (time-based, call-collect, premium rates) and lawful intercept legislation compliance. It also provides a wide range of facilities including session border control, including call access control, reachability and security.

But having an IMS framework is just one side of the game, to be able to derive the true value of convergence, the operators need to shift from their legacy collect, store and forward model. What a converged network environment demands is the capability of a billing system to pull usage details directly from multiple network elements concurrently and in real-time, as well as bi-directional to facilitate instant control of subscriber session access and usage.

The major challenge in mediating usage accounting data from IMS is the requirement to correlate and aggregate the usage data into complete billable records, which accurately reflect the actual subscriber transaction. Real-time charging is yet another core functionality, supporting the IMS SDP (Service Delivery Platform), enabling carriers to have total control over subscriber calls, sessions and events by providing the IN (Intelligent Network) SCP (Service Control Point) function with real-time status of a subscriber’s available account balance in session to mitigate revenue leakage, or from the credit control perspective to minimize uncollectible receivables leading to revenue leakage and subscriber churn.

All these said you might just want to relook at your infrastructure? Are you able to derive ROI for the IMS infrastructure? Do you have your systems ready for tasting the juice of convergence? Are your systems IMS ready?

Do you see your customer as a whole or in pieces? Subject banks to this visibility test exercise and you can easily diagnose ’short-sightedness’ from the symptoms they show..

As most banks are taking steps to improve customer servicing and CRM practices, their front-end is becoming a really happening place. However, silos and accounts still rule the roost at the back-end. General ledger posting is the only activity, which happens at a consolidated level at the back-end, thanks to the modern core banking systems. Meanwhile, the customers are becoming more and more demanding due to increasing bargaining power; they have more options now with global banks, regional ones and even non-banking players wooing them.

But even then, banks fail to see their customers as whole entities; they still treat them in ‘pieces’. They offer products and services as disparate pieces, without assessing the needs of the customers in a holistic manner. Touch points are still multiple, thus getting the attention divided and making the relationship less streamlined and less solid. In such a scenario, the probability of the customer getting lured away by a competitor, who can offer even a kind of crudely integrated offering, is manifold. As corporates consolidate their treasury functions, integrated banking needs are on the rise. If banks want to capitalize on this trend fully, they need to stop treating customers in pieces — they have to start looking at the holistic picture. Banks need to reflect the value, a customer brings to them in pricing as well. Only then, they can overcome the disorder of ’short-sightedness’, and see customers from a futuristic point of view — thus keeping the relationship more solid and lasting.

In order to overcome this disorder, the banks need to organize themselves internally around integrated banking services. They need to have end-to-end visibility of each customer relationship, right from front-end access points to a consolidated store of his products, activities, transactions, payments and inquiries – all these leading to a single statement and bill. Once this infrastructure is set up, the banks can view the customer as a whole on the long-term mirror, free from short-term aberrations. A centralized pricing and billing platform, along with this customer-centric IT infrastructure will help banks to permanently overcome this disorder. This might also help them with a ‘third eye’, not only to look at customers as whole entities, but also to keep tab on hidden aspects and opportunities in up-selling and consolidating relationships. Analytics and modeling functions will also go a long way in helping the banks sharpen their vision of customer relationships.

As declining ARPU and increasing customer attrition puts pressure on the operators’ margins, they seek greener pastures with new content VAS services. As operators get themselves into the content bandwagon, they follow traits from traditional models and enter into revenue share and settlement agreements with operators, where the latter holds the maximum share of the revenue for content usage approx. 60-70%, subsequently decrementing to about 10-15% as it transpires to the tip of the value chain. 

But unlike traditional business models, the current model does not give the operator the ownership of the content network or services. This brings more negotiating power for the revenue shared for content providers and aggregators. Moreover operators worldwide-already troubled over the legal issues faced from erroneous and inappropriate content billing, eagerly seek a vent. 

This has brought about a shift in the industry, where operators stay as access providers alone and content aggregators take on the responsibility to rate, bill and settle for the content services. Nevertheless this brings new challenges for the content aggregators; not only need they sustain relationships with the right content owners to showcase the most attractive content services, but also act as a technology enablers for delivering these services. This demands support for these high value and volume content transactions, charge them as per their type, size and other attributes, and also settle the revenue earned across the value chain. Easier said than done!   

All thanks to dynamic content provisioning, content usage based pricing and billing and flexible revenue settlement platform which has simply become a lynchpin of the content aggregator’s technology platform!!! 

Retaining your customers is a lot less expensive than getting new ones. So how do you keep them coming back for more? They will, if they perceive value. Mark my words; it’s about what the customer perceives. Even if your competition is offering a particular product at a lower cost, if the customer perceives that he is getting the best deal for a product bundle he will not move on.

Leading Banking, Financial services and Insurance institutions (BFSI) are pursuing this through innovative product bundling, by providing tailor made product packages for specific customer segments. These strategies on one hand help retain the customer and make him perceive value while on the other it ensures profitability to the bank.

Another dimension to the ability to price based on the cost is if you have a view to the ‘price sensitive products’ in the bundle, which your Relationship Based Pricing framework gives visibility to.

BFSI institutions realise the impact of customer retention on market dynamics, that rewarding customers for continued loyalty and their individual value offering is integral for sustaining profitable relationships. This is driving them to increasingly focus on delivering an innovative customer experience – one that targets unique segments and emphasizes convenience, service and value. Relationship Based Pricing is their enabler!

Today, the Utilities industry is very tech-savvy. High degree of automation has triggered the replacement of several manual processes. Automated Metering (AMR) has been one of the key turnarounds in this industry till date.

In this vertical, the traditional billing systems have been working on flat rating system, wherein the monthly meter reading is multiplied with flat unit rates. Now, AMR gives hourly meter readings and facilitate time-of-use pricing to the customers. This, in turn, has affected a surge in the volume of data handled by the business systems used by new generation Utilities. This has prompted the Utilities to think about more sophisticated systems that make the best use of their meter data.

The huge volume of available data can not only be used for billing the customers or improving energy efficiency, but it can also be the pivot to further business growth. Careful analysis of the patterns in usage data can bring about wonderful results for the benefit of Utilities. This gives ample scope for them to adopt usage-based segmentation of their customers, and to offer special packages and discounts based on their usage patterns. — All these resulting in improvement of customer retention in a highly competitive market. The data on usage patterns can also be used to prevent any possible fraud in their networks. Moreover, the Utilities can use this data as the input for planning tools such as load forecasting and energy auditing. All these will become possible, only if Utilities adopt the ‘best-of-breed’ Meter Data Management (MDM) system.

It’s time for the industry to acknowledge the fact that the deluge of the available data and its potential are far beyond the comprehension of the existing expertise, built over traditional practice. Utilities need to warm up to the most sophisticated systems being used in other industries, and adopt them to tap the full potential of the enormous volume of meter data available through AMR.

Today’s much talked mantra - “the new revenue stream” from value-added content services seems to have blind folded players as they run the marathon of me-too, with investments and upgrades of infrastructure to support NGN services. With IP infrastructure in place and with billing system upgrades, or content aggregator’s billing system, the operators try to keep with the pace of the market through content services roll out. Perhaps it would be too late before they realize that they are not able to retrieve revenue from this so called “new revenue stream”.

While operators have revenue assurance systems in place to plug their visible revenue leakages via transaction and process audits, bundling in place to attract new customers, and loyalty programs in place to retain their customers from the growing competition; seldom do they have systems that can comprehend their revenue spillage. What is more striking is the fact that it is the system inflexibilities that blocks this visibility for the operator. Industry stands witness to some classic cases of operational losses and shutdowns due to such system handicaps.

For e.g. many US MVNOs had to close operations due to revenue loses they faced. These were fundamentally due to system inflexibility to strategically segment customers, price and bundle adequately based on customer relationships, and run focused and profitable loyalty programs. Thus the providers need to have systems that give them the flexibility and intelligence to segment customers based on their usage patterns and account duration and subsequently enable the provider to arrive at profitable price plans, bundles and loyalty programs focused to each customer segments. Otherwise these inflexibilities would stand culprits to the providers being denied of their righteous revenue!