Advanced Strategic Pricing for Retail Bankers Powered by AI

July 13, 2018 Kyle Thom

Strategic pricing for retail bankers

As both a consumer and finance industry insider, it’s always fascinating to me when technology enables truly win/win situations. In the banking industry, it just so happens that we are reaching  a point in our digital transformation journey where that is happening more and more often.

As I tend to do, I’ll give you a for instance that directly applies to my life — my latest milestone is that I’m a new father. If you’re a frequent reader, you certainly may recall how AI could have facilitated a better loan experience between myself and my bank. Now, I’ll demonstrate an advanced strategy pricing tactic powered by AI that stands to develop a beneficial relationship with a customer for life.

Leveraging AI, machine learning and the power of strategic pricing for retail bankers, your bank could predict that my family is expecting months in advance — then start to surface relevant and compelling offers to expand our relationship.

How to create a customer for life, literally

Stay with me for a few minutes and you’ll quickly see how a single strategic offer can earn you a net new customer and create a decades long banking relationship — virtually guaranteed.

I’m a new father so I’m highly tuned into a financial vessel that, where I live, we call a Registered Education Savings Plan (RESP). As a consumer, I’m looking for the best way to save money for my child’s education. For a bank, however this product should be highly desirable. The stakes in grabbing this business are actually quite high when you consider the total lifetime value of a newborn child.

First, it’s a termed set of deposits that will likely see contributions for roughly 15 years or more from the parent. So it’s highly stable money for the institution. Next and more importantly, there’s a direct logic that transitions into a lifetime relationship with the child. I’ll spell it out:

  • RESP (15yrs)
  • Student Checking Account (5yrs)
  • Student loan (10yrs)
  • Primary checking account (Entire adult life)
  • Mortgage (30yrs)
  • Line of credit (10yrs)
  • Retirement Savings (40+yrs)

I’ll spare you the emoji with dollar signs in its eyes here, but that exact sentiment should be jumping off the page for bankers. You should be drooling over this opportunity to land grab an entire generation before they’re even born.

Where AI fits in

“That’s great… I see this, your logic is sound,” I hear you saying to yourself. Landing the RESP is crucial, but building the relationship through strategic pricing offers and ensuring customer stickiness is where a bank really needs to get it right. AI is the key.

As I mentioned — months before baby is born, I’m making purchases at baby-focused merchants and sending off enough signals (for the right tech) to infer that we’re expecting a child. Couple that with the fact that, as my main bank, you (with the right tech) already know the entire footprint of my relationship and are able to price and surface offers tailored just for me.

Perhaps you’re offering anyone off the street a $100 incentive to open an RESP, as are your competitors.  But since I’m such a loyal customer you’re willing to offer me, say $200 or even $500, to sweeten the deal and make it irresistible. Now say you’ve started to surface this offer on my mobile banking app, online banking, my monthly bill — or even let my branch manager know that I’m a candidate — just to get me thinking. By the time baby comes, the offer is at my fingertips ready to execute and I’m bought in. You have me.

More importantly, with AI the entire process could run without human intervention at the bank. There are countless opportunities for operational efficiency, revenue growth, and improved customer experience (with the right tech).

The product I need at a price that will earn my business is truly win win. This is customer centric banking at its core.

The bottom line and the obvious pitch

I’m telling you exactly how you could drive a stickier relationship, with more stable deposits, plus a net new customer in one offer. This is a highly valuable proposition in retail banking and one I don’t think you can afford to ignore as new generations of customers demand more personalized relationships — knowing them from birth is about as personal as it gets.

Could you pull this off today at your bank? How long would it take? How much would it cost?  With Zafin we could help your team pull this together and make this use case closer to reality — but this example is just scraping the surface of what’s possible with strategic pricing. We’re a worldwide leader in digital banking and we’re enabling banks around the world to think bigger when it comes to digital transformation. This scenario is certainly an example of what could be possible today for many of our customers.

Are you ready to see how AI can accelerate your bank’s digital transformation? Get in touch with us today to learn more!

About Zafin

Zafin (@zafin) is a leading financial technology provider that enables banks to form richer, more personalized client relationships. Built from the ground up for financial services, its platform empowers banks to enhance revenue and operational efficiency. Founded in 2002, Zafin sits among North America’s top FinTech companies, and is trusted by retail and corporate units at some of the largest banks worldwide. Headquartered in Toronto with global offices, Zafin has a proven track record with a 100 percent client retention rate as validation.

Don Halliwell

Don is the Senior Director, Growth Marketing & Communications at Zafin. As former editor in chief and contributor to numerous publications, Don is passionate about sharing stories. At Zafin he will drive a clear and compelling narrative focused on digital banking and innovation in FinTech. Follow him on Twitter @donnyhalliwell

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