Corporate Banking: Pricing

One of the most effective ways to improve commercial revenue performance is to adjust pricing on deposit rates and cash management services. At the same, the bank must ensure that valuable customer relationships are preserved and deposit and transaction volumes continue to grow.

Our pricing methodology combines several core elements:

• Leading Practices Perspective. We leverage our extensive research programs and client work to amass a comprehensive database of commercial pricing practices. Our benchmarks range from detailed calibration techniques to broad price governance models.
• Account-Level Analysis. Novantas carefully examines the price sensitivity of each customer account over a multi-year time series, utilizing proprietary database scripts. This analysis permits us to understand portfolio behavior at the deepest level.
• Segmentation. Novantas formulates and tests a variety of segmentation strategies. For example, we examine the opportunity to introduce new segment-level products in order to capture different levels of price sensitivity.
• Elasticity Modeling. Utilizing our proprietary elasticity-based methodology, Novantas constructs price elasticity of demand curves for deposit and cash management products. These curves permit the bank to model balance, volume, and margin impact across multiple dimensions.
• Reference Rate Analysis. Novantas tests portfolio behavior across multiple reference rates, including competitor rates, substitute product spreads, and funding benchmarks.
• Pricing Automation. Novantas provides clients with a pricing tool that allows pricing analysts to automatically track the bank’s rate position and model pricing scenarios using the embedded curves.