The retail financial services industry is changing. Deregulation has created a competitive market place in which successful providers are becoming increasingly customer-centric. Pricing has to also take into account all of the current regulation and is likely to be heavily effected by future legislation coming out of the current financial crisis. Therefore pricing is becoming a major strategic issue, but the majority of providers still use out-dated risk and cost-based pricing methods, and have yet to develop a centre of excellence around their pricing processes.
So what is price management? Price management is the end-to-end process of optimising, communicating, and enforcing prices and discounts. The benefits of improved price management are undeniable. According to management consultants, Simon Kucher & Partners, in the financial services industry today, with cost bases reduced and market shares hard to move, CEOs have yet to fully exploit pricing, but it is the most powerful profit lever of all. AMR Research, in a 2009 article, stated: