What’s the most overlooked factor in profitable small business lending? – Wei Ke – A Banking Growth Forum KEYNOTE Spotlight

     

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It’s psychology, according to Dr. Wei Ke, a partner based at Simon-Kucher & Partners, the global strategy and marketing consulting firm. While better analytics and application processing tech are substantially improving the ability of banks to make more small business loans profitably, there’s another lever banks can use to increase lending revenues and margins: the often irrational ways human beings respond to how offers and pricing are packaged and presented.

“Whether or not a lender recognizes and leverages these behavioral factors, they are affecting point of sale results,” said Wei, when we caught up recently by phone. In his Banking Growth Forum session, Decommoditizing Small Business Lending: Pricing Psychology at the Point of Purchase, Wei says he’ll show how understanding point-of-sale psychology helps lenders make the most of analytic insights.

“Elasticity scores and other metrics reveal customer sensitivities to price and offer characteristics. Point-of-sale psychology tells you what to do about these analytic insights—how to sell given what the data tells you about the customer.”

In the session, Wei will cover some of the many psychological dynamics that come into play at the point of sale, such as why borrowers often respond differently to dollar signs vs. percentages and why prices that are mathematically equal may not be emotionally equal, depending on how they’re expressed (e.g., APR, monthly payment amount, cents on the dollar). He’ll also reveal some secrets of powerful offer set design.

“I want attendees to walk out of the session with the idea that there are a lot more ways than they may have thought to increase customer willingness to pay. The limitations they thought they were working under—tradeoffs between various factors—don’t actually define the full scope of the small business lending opportunity anymore.”

About The Author

Ken is our CMO at Nomis Solutions.