The Power Multiplier of Operationalizing Price Optimization

    

The power of pricing science is now well demonstrated. Tapping into advanced techniques for big data and predictive analytics allows financial institutions to use nano-segmentation and price-sensitivity analysis to drive volumes, profits, or both.

This hugely powerful tool can also be leveraged across two additional dimensions:

  • By applying pricing optimization across verticals.
  • By applying it at multiple levels within a vertical.

Most large and regional banks have only started their pricing optimization journeys within the last couple years, and in many case sit is in one area of the bank, such as deposits or unsecured personal lending. Expanding across verticals (through mortgages, HELOC, etc.) has an additive effect for each vertical optimized, and has a multiplier effect when the vertical systems are integrated, sharing data so that, for example, a mortgage pricing decision can be partially informed by the deposits system.

The other multiplier comes by increasing the use of pricing excellence in each vertical “stack”. The most common example of this is a bank that starts with a solution like Nomis Price Optimizer (NPO) and then adds Nomis DM for Retail Banking, a discretion management tool.

DM helps to operationalize the prices set with NPO. Without DM, prices may be output to spreadsheets and sent by email for input into a frontline system. This is all straightforward, but suffers from being slow. The real impact of the speed hit will be felt hard when interest rates start a more normal up-and-down cycle. At that point, a few mavericks will make millions by leading the pack, most will seek the safety of the flock, and those who stray outside will incur huge risks. It is all about speed—speed to recalibrate and speed to operationalize.

About The Author

Experienced in Software Product Management leadership, roadmap prioritization and communication, cross-functional process definition, market research and validation, Product Marketing and the articulation of a differentiated value proposition, sales support, managing an efficient and agile product development process and executing on a fully aligned GTM strategy. Committed to on time and effective product release cycles, companywide and transparent communication of the product development process and managing/growing effective, collaborative and successful teams.