Sometimes, to understand where you need to go, you need to look back at what the past held. Banks previously employed a silo-based approach towards pricing and reacted only to competitive offerings when required. Supply and demand largely influenced prices
and rates, which were considered in the context of other banks’ offerings, rather than from the holistic value of a customer from a relationship perspective. Today, some banks that have embraced customer centricity are able to simulate the effects of transaction
volume and complementary products when determining pricing. In other words, technology is making a relationship banking strategy more valuable.
One area this affects is fee-based income, which is also a very visible area in terms of media attention (consider the uproar created from banks considering removing no-fee checking accounts to cover their loss of debit interchange fees via Dodd-Frank).
In order to remain profitable in these discretionary fee areas, and to stay out of the spotlight, banks need to have a 360-degree view of the entire customer relationship. Without this, there is no ability to waive an account fee in the interest of maintaining
an otherwise profitable customer relationship. A relationship banking strategy requires this kind of transparency and flexibility in order to properly measure and reward customers for their loyalty – however that is only the beginning.
Total customer centricity goes beyond a simple fee waiver system. A bank must be able to accurately measure and report on customer behavior in order to better predict what kinds of products and bundles their customers would like but do not demand. This element
of segmentation requires a truly flexible innovation layer. With simulation functionality, banks can profitably base their pricing and bundling decisions on real data and predictive models rather than looking at what the competition is doing and copying those
offers. The banks that make these innovative technology investments in functionality that creates dynamic pricing and simulation are also investing in relationships – and those that choose a solution built only for financial services will realize the profitability
of true relationship banking.