Deposit pricing in Malaysian banks remains reactive rather than strategic

When one bank moves, rivals often just follow its lead.

Malaysian banks’ board rate setting in deposit pricing is a reactive approach, creating a competitive copycat cycle rather than a strategic profitability tool, according to Dr Silvio Struebi, Partner, Head Financial Services APAC at Simon-Kucher.

Speaking at the Asian Banking & Finance and Insurance Asia Summit - Malaysia, Struebi said this has resulted in limited differentiation in deposit pricing, with many banks effectively applying a “one-size-fits-all” approach across customer segments.

“You go into branch A, you get [rate] X, you go into another branch, [you get something different]. So consistency is relative,” Struebi added.

Around 50% to 65% of deposits are priced at the standard rate. General differentiation is hardly implemented, and most banks do not have consistency across online and offline channels.

Struebi said they often see that most banks are good at selling rates, but weak when it comes to proper construct, distribution, and channel strategy.

“Pricing, of course, is the one that's most visible to customers and gets the most attention. And I would say in Southeast Asia, from our work, most of the banks range somewhere along the same spectrum. Some have certain tiering, right? So you have mass, priority, private banking, and then they offer higher rates. But it’s still static. It’s not dynamic because you don’t consider willingness to move funds,” he said

Struebi said banks need to move beyond static structures towards value-based pricing driven by transaction data and behavioural analysis. Customer behaviour varies depending on the use of funds, allowing banks to refine pricing at a more granular level.

Struebi said longer-term data is key to improving pricing accuracy and that this supports a shift away from broad pricing towards more customer-specific decisions.

Struebi also pointed to structural challenges, noting that legacy product complexity limits effectiveness.