Photo by Engin Akyurt via Unsplash.

How banks should rethink pricing

It’s not just about how much customers pay but also what benefits they get.

There's no such thing as “one size fits all” in banking nowadays: the battlefield has moved to providing personalised, empathetic customer experiences. Separate studies by Capco and Accenture found that over seven in 10 customers value personalised services in banking, and are more likely to go and stay in a bank that offers individualised banking journeys.

A separate report by Forrester highlighted the need for customers to feel a personal connection with their bank. Similar to Capco and Accenture, Forrester found that 7 in 10 customers in the Asia Pacific are more likely to be loyal and spend more money in financial institutions who they believe empathise with their personal financial needs.

One critical junction in the frontlines of clinching customer loyalty is pricing. Unfortunately, banks often do not factor consumers’ willingness to pay: too much, and you miss out on potential customers; too little, and it may give your target customer the wrong impression.

 “The challenge with the pricing models of banks is that they often do not factor consumers’ willingness to pay. As a result, they may drive top-line growth but do not fully capitalise on the opportunity to deliver sustainable profitability,” Rohan Bhalla, vice president of Business Solutions for Asia Pacific at Collinson, told Asian Banking & Finance.

For banks, the dilemma is intertwined with the need to deliver profitability and grow revenues in ways that do not create additional business risk or inflate costs. Bhalla noted that rethinking pricing to drive bottom-line impact is essential.

ALSO READ: Empathy deficit erodes customers’ trust in banks

One common strategy suggested by experts is for banks to adopt smarter pricing.
Bhalla encouraged banks to view consumers as the new “C-Suite,” highlighting the need to clearly understand their preferences, behaviours, and aspirations.

“With this understanding, banks can in turn prioritise and tailor offerings that resonate with different customer segments and charge differential pricing based on consumer willingness and ability to pay,” Bhalla said.

This is not just adjusting prices based on customers’ ability to pay, but also to ensure that the services offered align with the right audience.

“The customer value proposition needs to be realigned to the pricing model to ensure allocation of the right benefits, and incentives to the right audience. This customer-centric approach is paramount to creating sustainable profitability and genuine customer engagement and loyalty,” Bhalla noted.

One example is offering travel-related perks. In a 2023 study by Collinson, over eight in 10 or 83% of the respondents from Asia Pacific said that travel-related rewards and benefits encouraged them to stay with a bank.

Over seven in 10 (73%) of the respondents also said that they would choose a bank based on the availability of such rewards, Collinson found.

“Rethinking pricing is not just about numbers; it’s about understanding the evolving expectations of consumers and using this knowledge to further strengthen the organisation’s customer value proposition,” Bhalla noted.

He added that by leveraging such insights, banks can capture more than just short-term revenue — they deepen relationships with their most valued customers and in-turn, drive longer-term commercial returns.

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