Trend Report

Financial Services Institutions Should Tackle Price Optimization

Mary Pilecki
 and  three contributors
Feb 15, 2007

Summary

Retail financial services institutions (FSIs) continue to struggle to increase share of wallet. But the majority of consumers don't believe that their FSIs are rewarding them appropriately for their current relationship — so why buy more? Financial institutions are starting to take a lesson from retailers by considering price optimization as a strategy to reward relationships and ultimately grow them. While credit card divisions have made some progress, retail FSIs have barely scratched the surface. Retail FSIs must build new pricing strategies that incorporate price elasticity of demand, individual relationship value, multiple consumer inputs, and dynamic pricing capabilities. The vendor marketplace is opening up, and there are several software firms that offer tools and consulting to help FSIs get started.

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