Banks urged to turn pricing into a strategic growth lever

A consultant says data-driven pricing can boost revenue and lower funding costs without sacrificing volume.

Banks should stop treating pricing as a reaction to market movements and instead use it as a strategic tool to drive growth, according to Simon-Kucher.

Speaking at the Asian Banking & Finance and Insurance Asia Summit in Singapore on 1 July, Dr. Silvio Struebi, partner and head of Financial Services APAC at Simon-Kucher, said many banks continue to rely on one-size-fits-all pricing and ad hoc discounting, missing opportunities to improve profitability and customer outcomes.

"As we all know, when a relationship manager is facing a client... it comes pretty soon to the pricing topic," Struebi said. "Data offers a lot of opportunities, and this is currently an area that we feel is pretty much underutilised across Southeast Asian markets."

He said banks often adjust prices in response to central bank rate changes or competitors' moves rather than using pricing as a means of strategic differentiation across customer segments, product lifecycles and business objectives.

Instead, Struebi said banks should use customer transaction data to understand individual pricing behaviour and tailor offers accordingly.

Working with clients, Simon-Kucher analyses transaction flows over roughly 48 months to identify how customers move money between products and measure their price sensitivity. Those insights are then translated into pricing models that relationship managers can use when offering products.

"We derive certain scores about elasticity to understand which part of the book or client is elastic and which one is more inelastic," he said.

According to Struebi, banks implementing the approach for the first time can typically reduce funding costs by around 12 basis points without losing deposit volumes, with savings generally ranging from eight to 18 basis points.

He stressed that pricing transformation extends beyond setting interest rates and requires changes across product design, campaign management, distribution channels and discount governance.

"When you optimise the top line, you really need to think front to back," Struebi said.

He also encouraged banks to simplify product portfolios, review legacy promotional products and design offerings that reward customers with stronger banking relationships rather than attracting short-term deposits through higher rates.

Changing frontline behaviour is equally important, he added. Relationship managers should receive pre-approved pricing guidance, clearer incentives and structured talking points to reduce unnecessary discounting and improve pricing consistency.

"Every single basis point counts," Struebi said.

Whilst software can support pricing decisions, Struebi cautioned against treating technology as the starting point for transformation.

"You need to change a bit the setup and the processes, otherwise the software will not be helpful," he said.

Instead, he recommended that banks first redesign pricing processes, validate new approaches through pilot projects and then deploy technology to scale successful models.

Summing up his presentation, Struebi said differentiated pricing should become the norm rather than the exception.

"One price fits none," he said. "If you have a product and just one price, you're either too expensive or too cheap. You leave money on the table."