Global banking outlook: 2013-14

Building better price models

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Many existing models are dependent on cross-selling assumptions. With more customers becoming multi-banked, those models will cease to add up.

Four factors will drive pricing discussions in 2013-14:

  • Higher cost of funding via customer deposits and the markets
  • Higher capital charges imposed by Basel III
  • Customer expectations for more transparent pricing
  • Regulatory scrutiny on fees and charging schedules
  • Reduced customer loyalty, which challenges retention and cross-selling assumptions

As banks engage larger corporate clients in potentially difficult conversations regarding the costs of capital, global pricing models should be a topic for discussion. Fees are generally transparent yet inconsistent pricing across regions (such as “free” basic services in many developed markets) frustrates clients.

Many existing models depend on cross-selling assumptions. With more customers becoming multi-banked, those models will cease to add up.

In rapid growth markets, prices will continue to be based around transaction charges. New services, such as mobile banking, may be free initially to gain customers, but charges are likely to follow.

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