Benefits of a New Pricing Engine in Banking

“Ooh, this isn’t going to be cheap.”  

Whether from the mechanic with your car up on the lift, the plumber under your kitchen sink, or the exterminator who just found that termite damage, these are the words we all dread. They force us into decisions that boil down to significant and costly repairs versus expensive and disruptive replacement. 

Old Pricing Methods are Keeping Banks Behind 

 

In order to compete in today’s world, customer experience (CX) demands much quicker decisions than ever before, but you must not take on unacceptable risk in the quest for speed.  

Your proposal for improving your credit decisioning must also be achievable in a reasonable amount of time, or competitors will continue to have the upper hand, and ROI will always appear just out of reach. 

For more than 30 years, consumer decisioning has been based on credit scoring and statistical modeling of large groups of consumers. One option to improve your decisioning is to repair and update these methods and tools, but it’s unlikely that you’ll achieve more than marginal improvements with this approach. 

On the other hand, you’ve likely been approached by fintech software providers advocating a complete overhaul of your decisioning infrastructure, a “rip and replace” proposition that makes your IT team blanch when the words are even uttered. 

Is there a way to have the best of both worlds? Can you have leading-edge functionality, while peacefully co-existing with the underlying technology that’s already in place? Can you make something happen quickly, without sacrificing compliance and governance? 

Here are the things to look for, a checklist if you like, in the quest for the right solution: 

  1. Comprehensive Pricing Functionality
     
    When evaluating technology for risk-based pricing, look for solutions that will give customers the time-sensitive answers they want and need, all within a single, integrated, end-to-end solution.  

    A solution that allows for the development of precise, granular pricing structures with integrated simulation and optimization capabilities. Use this opportunity to escape the limitations of traditional decisioning based on credit scoring and statistical modeling. Look for a solution complete with the power and precision of artificial intelligence and machine learning capabilities that allow for faster, automated pricing processes, more personalized offers, and the ability to upsell and cross-sell opportunities at both the point of decision and later in the customer lifecycle. 

  2. Maintain Governance and Compliance 

     

    In the search for speeding up decisioning, you don’t want to expose the bank to additional risk or regulatory scrutiny. 

    The ideal solution will give you access to tools to automate and improve governance, risk management, and compliance. It will allow for complete audit trails, detailed records, and comprehensive reports, giving the pricing team and compliance officers fast, easy access to all activity, a critical edge in complying with even the most stringent regulations. Make sure that all this information is also permanently archived for easy access in the future. 

  3. No “Rip and Replace” 

    Avoid any technology that requires a “rip and replace” implementation, with all its headaches and expense. The right solution will allow you to take a step-by-step approach to architecture and infrastructure, and to implement a well-integrated and flexible technology stack, whatever the starting point.  

    Ask the vendor about their support for open application programming interfaces (APIs) that will allow for smooth integration with current in-house applications and with Open Banking and other industry standards. With these capabilities, you can move at the pace that works best for the business, knowing that the end-state is solid and optimized for your bank and its needs. Give your IT team new technology without having to deal with significant disruption to operations. 

  4. Quick Return on Investment (ROI) 

    Your current pricing engine is likely deployed in-house. This on-premise configuration made sense when there were not alternatives, but today it results in unnecessary complexity, high IT maintenance resources, and overhead expense.

    Look for your new pricing engine to be deployed as a cloud-based, Software-as-a-Service (SaaS) solution. Complementing the ability to avoid “rip and replace,” this will allow you to leapfrog your pricing functionality in months, not years, delivering ROI quicker than any on-premise solution can. 

All these are available today 

Now that we have understood the pressing needs and requirements of banks, it’s time to introduce a solution that meets them all. Equipped with the most advanced artificial intelligence and machine learning technology, Earnix offers state-of-the-art and robust pricing capabilities, enabling you to price faster, safer, smarter, and more personally. 

It is your opportunity to deliver an unmatched customer experience (CX), reduce time to market for new products and services, own the ability to react quickly to changing market forces, and give your sales and marketing teams new options in record time.  

What could be better than that? 

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