Customers face more choice than ever as the US and most other markets grapple with dynamic interest rates, increased conduct scrutiny, and stagnant revenue growth outlooks.
Advancing strategies to position product classes, pricing structures, and bespoke offerings in a profit-maximizing manner is key to avoiding commoditization, and regulatory and sustainability challenges.
Product and pricing strategies have been a core competency of Novantas since our founding. We maintain our leadership by delivering superior insight from our benchmarks on customer and product behavior that effect tangible product improvements – all in a common language for benefit across constituencies.
Prepare a Response to Rising Rates
With base rates now moving upward for the first time in almost 10 years, deposit bankers need to flex strategic and tactical muscles that have been unused for longer than many of them have been in role. Novantas’ approach allows bankers to prepare now instead of paying later.
- Understand how rising rates impact retail banking growth, mix shifts, and betas at a granular, front-book back book level—and how their bank differs from competitors.
- Develop plans for how much each standard tactic can deliver high-margin growth—and when to shift to breakout approaches before returns diminish.
- Prepare contingency plans for the “known unknowns” like high commercial deposit run-off or large-scale direct banking entry—providing our clients a proactive agenda instead of a default to expensive, knee-jerk reactions.
Overhaul Promotional Strategies
Analytically driven promotional pricing has been a consistent way for banks to gain deposit share while maintaining discipline in overall portfolio costs. New approaches—longitudinal analysis of customer responsiveness, improvements to offer prioritization and delivery, and big data insights—allow banks to maintain this critical lever by:
- Discovering the current “sweet spot” available through promotional price as currently delivered, and with refinements.
- Setting alternative agendas to maintain this key approach before “promotional fatigue” sets in among customers and the front-line.
- Delivering a “give-for-get” logic tailored to the customers’ revealed behavior and needs.
Transform Customer-Level Pricing with Big Data Insights
The banking marketplace has been abuzz with the prospect of customer-level pricing for years. We provide the advisory and technological expertise to help banks move from the ephemeral promise to demonstrated returns—and providing expert counsel for when other measures are a near-term better fit:
- We provide a “truth-and-justice” answer for when and how a particular bank can drive outsized returns. We are agnostic in our answer to make sure banks make the right choice for their pricing investments
- We apply proven treatments from our work to achieve “quick wins” and avoid early failures while building the bank’s long-term inventory of successful approaches
- We can stand a bank up quickly through delivering a proven technological platform (savings months in time-to-market and internal IT charges) align our delivery to existing architectures
- We provide ongoing scoring and tagging services to clients enable ongoing delivery without consuming precious data scientist resources
- We give frank counsel on organizational enhancements to ensure that siloed decision-making—built for an old world—can be reinvented to ensure delivery of the business case mandate.
Beating the Odds in Direct Bank Deposit-Gathering
Recent Novantas analysis suggests that the growing direct bank market will experiences betas above 100% this cycle, frustrating deposit-gatherers and alarming Treasurers with the prospect of a liability-sensitive instead of asset-sensitive funding source.
Novantas helps established players and new entrants beat these odds and reduce funding costs with a blend of advisory and technology services that:
- Integrate decisions on rate paid and marketing spend to reduce total outlays to meet funding goals.
- Distinguish market-moving competitors vs. “fly-by-night” upstarts through quantified reference rate comparisons.
- Substantiate the value of deposits boarded for internal and external scrutiny of balance stability and attractiveness.
Driving Top-Line Revenue in Mortgage Banking
Bank and non-bank mortgage units are scrambling to maintain ROE in the face of structurally higher operating expenses and a shrunken market now dominated by price-sensitive purchase volume.
Novantas’ new approaches to mortgage pricing provide documented lifts in originations—typically 25 bp on held-for-sale product and 5 bp per year on portfolioed originations by:
- Moving from a “cost-plus”, capital markets based answer per loan to an equation also optimizing customer demand.
- Incorporating regional sales’ teams local insights to improve price exception efficiency.
- Transforming competitive metrics using local price points and anticipated share by product, purpose, channel, and region.
- Maximizing revenue in a constrained origination situation—whether from balance sheet rationing or pipeline backlogs.
- Delivering intra-day refreshes to optimized price points to ensure business case returns.
Last year, about 45% of new checking accounts were opened at the three national banks, even though those lenders only had 24% of U.S. branches. Regional and community banks, by contrast, had 76% of branches but only got 48% of new accounts.
“Folks are still hanging onto this comfort of feeling like there is a branch nearby if, and when, they need it,” said Matthew Sharp
Mobile banking apps keep getting better, but 60 percent of Americans would still rather open a new checking account in person at a bank branch than on a phone, tablet or desktop computer, according to a new survey.