Southeast Asian banks lose funding efficiency as pricing remains fragmented

Data-led segmentation and pricing discipline can reduce leakage and improve funding cost outcomes.

Banks in Southeast Asia are leaving value on the table through unstructured pricing and underutilised transaction data, while relationship managers struggle to defend margins against client pushback, competition, and inconsistent rate setting.

“There is a wide gap between published rates and the rates customers actually receive,” according to Dr. Silvio Struebi, Partner and Head of Financial Services APAC at strategy consulting firm Simon-Kucher. 

He added that preferential pricing is often applied inconsistently, resulting in pricing leakage and higher funding costs.

“Pricing decisions are often reactive, with banks following competitors or central bank benchmarks instead of using pricing as a strategic tool,” he said at the Asian Banking & Finance and Insurance Asia Summit in Thailand on 28 April.

He said pricing should be managed across the full value chain, including product design, frontline execution, channels and governance, noting that many banks still operate with overlapping or legacy products that push customers to focus on price.

Struebi said transaction data can help banks understand customer behaviour and price sensitivity, allowing them to identify which customers are more rate-sensitive and which are not for more targeted pricing.

He added that “most banks are still at an early stage, with pricing decisions often left to branch managers instead of supported by central systems,” with the goal being dynamic, segmented pricing delivered in real time at the point of sale.

He outlined an approach using transaction flows over time, including inflows such as salaries and outflows such as loans and transfers, combined with market and competitor data to model customer behaviour and price elasticity.

This can reduce unnecessary discounting and improve funding costs by around 8 to 12 basis points, he said.

Struebi noted that price sensitivity varies by product and use case, requiring tailored pricing at both customer and product level, with geographic differences also playing a role in larger markets.

He said simplifying product offerings is key, as overlapping products increase price sensitivity, and aligning products with segments such as retail, affluent and wealth can improve pricing effectiveness.

He added that price-driven campaigns often attract short-term deposits that are not stable, and banks should instead focus on longer-term relationships and customer value.

Struebi said campaigns should follow a clear pricing strategy rather than short-term funding needs, highlighting the importance of grouping customers, including at household level, to avoid inconsistent offers, alongside guardrails to ensure pricing remains within defined limits and regulatory expectations.

He said the goal is to deliver personalised pricing through digital channels and frontline tools, supported by data and decision systems. However, banks must first build core capabilities such as data infrastructure, product structure and channel integration.

He said some banks already manage hundreds of pricing combinations across products, segments and regions, increasing the need for system support, and highlighted tools that track deposit flows between products and in and out of the bank to support planning and decision-making.

Struebi said optimisation tools can predict customer responses to pricing changes and recommend rates to meet funding targets at the lowest possible cost.

He said personalised pricing improves revenue, efficiency and execution, whilst helping relationship managers focus conversations on value rather than price, adding that “one price fits none,” and banks need to move towards segmented and individualised pricing.