Margin pressure forces banks off board-rate deposit pricing

Deposit pricing strategies shift as competition tightens funding conditions.

Banks are shifting toward segmented and individualised deposit pricing as net interest margin (NIM) pressure intensifies.

At the Asian Banking & Finance and Insurance Asia Summit 2026 in Indonesia, Alan Lim, partner at Simon-Kucher, said the industry is moving away from “board rates” and preferential pricing models towards pricing based on customer behaviour and price sensitivity.

“There is always a need for action. I believe everybody has the experience of a ‘one size fits all’ because you typically had a board rate in the bank,” said Lim. 

Pricing in many Asian markets remains unstructured and reactive to interest rate changes, and banks often lack strategic differentiation across channels.

Pricing decisions often depend on relationship managers and market movements rather than structured models, Lim said. 

“If you are not happy with the board rate, you will just go back to the bank and say that I want a preferential rate,” he said.

Banks should shift toward elasticity-based pricing models that adjust rates based on customer sensitivity. Banks are already open to adjusting rates through negotiation, where customers request better terms based on deposit size, Lim said.

“We really look at how we are able to develop individual and segmented pricing that we use dynamic pricing on an elasticity model,” he said.

Some customers show low sensitivity to interest rates, whilst others actively shop for fixed deposit rates.

Banks could also reduce funding costs by allocating higher rates to rate-sensitive customers and lower rates to less sensitive customers, Lim said.

Many banks operate with fragmented deposit product ranges, which can lead to customer confusion and rate shopping. “One important thing is also the product complexity actually drives rate shopping and also higher churn,” he said.

Customers often choose the highest available rate when faced with multiple similar savings products, emphasising confusion amongst clients, he noted.

Today, banks are increasingly developing pricing systems that link segmentation, flow of funds analysis, and optimisation tools, with the aim of reducing funding costs and improving deposit growth.

Doing so can improve a bank's NIM by eight to 18 basis points, Lim said.