Strategic Deposit Pricing: Using Advanced Analytics to Optimize Margin and Volume in a Competitive Environment

Conducted by Earnix and SourceMedia / American Banker 

Banks need to begin to position themselves for a rapidly changing environment. The old school approach of benchmarking deposit prices against rivals could mean getting caught in a rapid upward spiral of rate increases, cancelling out gains from higher asset yields. That’s where analytics can change the game.
Several banks have already begun to position themselves for the changing environment by using sophisticated analytics on customers to determine their sensitivity to deposit rates and service charges.

By identifying customer elasticity and demand within valuable customer segments, banks have turned pricing into a science, and a recovery in profit margins is well within reach. Indeed, even in a low-rate environment, pricing analytics are highly effective in increasing profit and managing customer experience.

To assess banks’ goals and expectations for their deposit businesses, and to evaluate their preparedness for increasing interest rates, Earnix commissioned the research unit of SourceMedia – the publisher of American Banker – to conduct an online survey of over 200 industry executives. The surveyed executives represent banks across the asset-size spectrum, and nearly all are involved in setting rates and service charges for depositors. About a quarter are chief executives or other c-suite officers, and nearly all are senior executives at their institutions.

 

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