Pricing any deposit product breaks down into two distinct categories. There are the technical aspects of pricing your deposits to optimize volume, duration, and convexity and then there are aspects of marketing economics. Masters of deposit pricing must understand both.
Tag: Pricing Tactics
We have discussed in the past how banks can increase sales in some regions and to some customer segments by moving to an annual membership fee (HERE). In this article, we look at the opposite and how banks can leverage the “daily incremental cost principle” to help spur sales of fee and deposit product. Customers evaluate bank products based on the logic of perceived value, but they purchase bank products largely based on emotion.