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FIVE STEPS TO CUSTOMER-CENTRIC PRODUCT PRICING

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FIVE STEPS TO CUSTOMER-CENTRIC PRODUCT PRICING

Satya Swarup Das, Senior Solution Architect, Virtusa

The digital age has changed the battlefield for banks. They face disruption from fintechs, and the challenge of tech heavyweights like Amazon entering the financial services field emphasises issues around banks’ aging infrastructure. All of these problems must be navigated whilst ensuring continued profitability. Yet, as boardrooms focus on employing digital innovation to their advantage, crucial questions around how to stay profitable are being abandoned – in particular, the fundamentals of product pricing.

Product pricing is an area many banks are ignoring at their peril. Today, a majority of banks are still working on a ‘cost plus’ approach when deciding the price of their banking products while also keeping an eye on competitors’ pricing. The result is that a great many offerings look quite unidimensional from a customer point of view, as there is hardly any innovation. The age of generalised segmented offers is over – customers want individualised offers that make sense to them specifically. In all activity, including pricing, banks need to shift from a product-centric mindset to a customer-centric one.

Changing the perspective

Research has repeatedly found that, regardless of geography, the price is one of the biggest reasons why customers shift their loyalty from bank to bank. For all the work going into digital transformation and shop-front improvements, this highlights how product pricing remains a core concern for customers. With this in mind, there are a number of steps banks can take to alter their pricing strategies and improve the customer experience as a result.

  • Change segmentation criteria: Today, many banks use geographic segmentation to divide up customers and tailor offerings. However there are far more logical clusters that can be used; such as interests, identification, and financial situation. Products have to be rethought and redesigned based on customer demand analysis from these profiles, and pricing dynamically applied depending on factors such as usage and price sensitivity. Doing so requires banks to deploy machine learning based analytics.
  • Continuously updated profiles: Banks need to ensure customer profiles are regularly re-evaluated to accommodate changing circumstances, in order to maximise life value. A customer on boarded with a particular product and pricing might work at that point in time but several years later, her situation could be entirely different, requiring different products. Continuous augmentation of the customer profile is therefore necessary, allowing banks to understand the customer’s life stage, preferences, and social interactions. This data can be used to draw out meaningful insights, radically improving the type of pricing and product offers made available.
  • Loyalty oriented pricing: How often do we see new customer bonuses with loyal users being ignored? If product design and pricing is targeted towards retaining customers – as it should be – then banks need to ensure their prices reward loyalty. Banks must proactively send relevant offers and loyalty points to customers to keep them engaged year after year. These offers act as a powerful incentive to stay with a brand, while also offering a chance to upsell new services.
  • Dynamic pricing: When it comes to product pricing, traditional banks often are bound by the fact they operate within low margin and regulatory constraints. This means it’s even more important to price dynamically so that net profitability is maintained. Customers aren’t always attracted to low pricing or discounts, and there are many factors that impact this decision. These include, demand, availability of similar level of service in the market, and urgency of the service – that banks need to be aware of and able to adjust accordingly.
  • New offerings: By partnering with third party service providers, banks can include more unconventional services into their products, such as a mortgage loan in partnership with another firm that provides small financing options (e.g. for smaller purchases such as furniture).Traditional banks may argue they already offer such financing options through credit cards, but by positioning themselves as a conduit to all of a customer’s financial needs, the bank becomes a part of life of the customer – going far beyond the usual bank/consumer relationship

Preparing for the shift

In the future, banks profitability will be driven by the careful use of analytic tools, the ability to extract meaningful data, and a solid pricing strategy. Pricing cannot sit within one department but will become the collective responsibility of everyone from marketing and sales, to product management and customer services. It needs to be inculcated as a core part of the organisational culture.

The above steps represent a substantial shift in the way banks think about pricing, but there are a number of commercial, off-the-shelf solutions available in the market today to help make that transition. Banks have a range of options to suit them; while there is no one-size-fits-all solution, by devising a strong pricing strategy and reviewing the offerings of firms like Zafin, Nomis and Suntec, each bank will be able to find a vendor that meets their needs.

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Nearly 14 Million1 UK adults more likely to spend on Black Friday than they were last year

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Nearly 14 Million1 UK adults more likely to spend on Black Friday than they were last year 1

Yolt launches evolved app to help shoppers save whilst they spend

  • Across the UK, consumers are set to spend £6.4bn on discount days
  • Despite the pandemic, 1 in 5 stated they would see an increase in their spending on Christmas this year, revealing they will be likely to spend £240 more than they spent last year
  • Yolt today launches a brand-new evolution of the smart money app, which aims to help people save whilst they spend, saving a minimum of £416 a year
  • To help people spend smarter this Black Friday, the smart money app Yolt has a host of new features including round up functionality, and cashback offers with a wide range of retailers including John Lewis, Argos, Asos and Domino’s

New research* from Yolt, the award-winning smart money app, reveals that over a quarter (26%) of UK adults have said they are more likely to wait for discount days, such as Black Friday, to do their Christmas shopping than they were last year. In response to the pandemic and to help people shop smartly in the run up to the festive period, Yolt has launched a brand-new evolution of its app designed to help users to save whilst they spend. New features include the Yolt account and virtual Money Jar, as well as new cashback partnerships with the likes of John Lewis, Argos, Asos and Domino’s. The evolved smart money app can be used to save shoppers a minimum of £416** a year.

Despite the challenging economic climate, Yolt’s data insights from the first lockdown period in the UK showed that there were increases of up to 355% on spending in categories such as groceries, online clothing retailers, takeaways, and streaming and gaming services. On top of this, Yolt’s data revealed a change in consumers’ financial priorities – with many attempting to save in lockdown, but 65% not being successful in doing so. Therefore, to enable people to find the right balance in their efforts to save for any uncertainty that lies ahead, but also enjoy discount days such as Black Friday and festivities in the run up to Christmas, Yolt has launched a host of new features uniquely designed to help people save whilst they spend.

The evolved app comes at a time of challenging economic conditions, where more UK consumers are actively seeking discounts to try and balance the books this Christmas. Yolt’s research found that consumers across the UK spend an average £6.4bn on discount days such as Black Friday.

In total, over a third (35%) of UK adults said they would be looking to take advantage of upcoming discount days, with nearly one in five (18%) stating they do all their shopping for Christmas and birthdays on discount days and during sales. UK consumers said they tend to spend over £120 on days such as Black Friday and Cyber Monday, and surprisingly almost one in five (19%) state they will actually see an increase in their spending on Christmas this year, verses last year. Those expecting an increase revealed they will likely spend an average of £240 more on this Christmas when compared to last year.

Concerns around affording Christmas are perhaps leading more people to take advantage of Black Friday deals than in previous years. Almost four in ten (37%) don’t tend to set savings aside for Christmas, and almost a quarter (23%) said they are going to have to dip into savings that weren’t allocated for Christmas this year. Finding the right balance between spending and saving for future uncertainty is going to be an increasing challenge for people during the festive period.

Pauline van Brakel, Chief Product Officer at Yolt, comments: “Given the incredibly challenging times we are facing this year as a result of the pandemic; it’s perhaps unsurprising to see that people are more likely to wait until popular discount days such as Black Friday to help them to spend smart over the festive period.  Savvy spending in the run up to Christmas is always a good idea, and discount days can help ease what is for many a very expensive time of year – having said that, people should try not to overspend and risk getting themselves into debt.”

Pauline continues: “Finding the balance between spending and saving isn’t easy. And whilst it might seem like a difficult time to save right now it is also perhaps more important than ever. We’ve launched an evolved version of the Yolt app to help people save whilst they spend. The app enables people to spend smart by earning them cashback on their purchases at selected retailers and rounding purchases up to the nearest pound. Encouraging users to save is central to the app, not only by spending smartly but also by finding them competitive deals on their household bills and even spotting Christmas bonuses or refunds and prompting users to add them to their virtual savings jar.”

The new Yolt app is available from today, with full access to all UK users on iOS. Android will follow in 2021.

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Christmas isn’t cancelled: European shoppers plan to spend more online this Black Friday

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Christmas isn’t cancelled: European shoppers plan to spend more online this Black Friday 2
  • Half (52%) of European consumers plan to do Christmas shopping around holiday sales, including Black Friday, compared to previous years
  • 60% say they are planning to do most of their Christmas shopping online
  • A third (34%) plan on leaving their Christmas shopping until the last minute in hope of securing bigger discounts

As Black Friday approaches, European consumers are not going to let a turbulent year spoil their Christmas. As shoppers continue to adapt to the changes caused by the COVID-19 pandemic, they are getting even savvier with their spending. New research from Kaspersky has found half (52%) plan to do more Christmas shopping around sales or shopping holidays, including Black Friday, compared to previous years. What’s more, a third (34%) plan on leaving it until the last minute in the hope of securing bigger discounts.

In a bid to enjoy Christmas while also adhering to COVID-19 social distancing measures, European consumers are focusing their attention away from physical stores to find their gifts. In fact, three-in-five (60%) say they are planning to do most of their Christmas shopping online. A fifth (20%) go as far as saying they will make all of their festive purchases online this year, despite not usually doing so.

With online sales set to rise, Kaspersky’s findings also indicate that most consumers are not expected to scale back on their Christmas spending – despite economic recessions across the continent. Only a quarter (26%) of consumers are planning to reduce their Christmas shopping budget this year by at least a third or more due to financial restrictions caused by COVID-19. However, this figure rises to 30% amongst 25 to 34-year-olds, the age group most widely affected by pandemic-related job cuts.

Yet, as the number of consumers bargain hunting online rises, so does the amount of risks being taken to secure big savings. Only 16% are not willing to exchange their personal data for online discounts – despite the potential of falling victim to fraudulent websites and sales scams.

“The festive period is always a big deal, and never more so than this year, as people seek to redress some of the chaos the pandemic has caused throughout 2020. It stands to reason that people are looking to do the majority of their sale shopping online in a bid to stay safe, as well as grab a bargain. But we must also consider that where the crowds go, the criminals follow. Just as pickpockets flock to crowded areas hoping to get lucky, cybercriminals will be looking at consumer shopping trends and trying to exploit people’s eagerness to grab a bargain and save some money. So, my advice would be that people do their research, follow some basic common sense measures when shopping and avoid getting swept up in the tidal wave of hype as we seek to remedy 2020 with a happy festive season. One thing to always bear in mind is that if it seems too good to be true, it probably is,” comments David Emm, Principal Security Researcher at Kaspersky.

Kaspersky warns bargain hunters to remain wary of potential Black Friday and festive season sales scams. If a deal looks too good to be true, it probably is.

Shop online with confidence this Christmas by following our advice on avoiding retail scams:

  • Only shop with legitimate online stores. It’s always safer to type in the address yourself, or select it from your bookmarks, rather than clicking on a link. Use your browser address bar to check if the website you are visiting is genuine and secure and that they carry the padlock or HTTPS
  • Complete purchases through secure payment methods. Pay with credit cards or robust payment services so that transactions remain protected
  • Verify discounts. If you receive a sales discount via email or text, check the sender and any web links are legitimate before you click
  • Keep your device software and applications up-to-date and protect all your devices with a reputable internet security product. Cybersecurity solutions with behaviour-based anti-phishing technologies, such as Kaspersky Total Security, can send your notifications if you are trying to visit a phishing web page
  • Manage your passwords. Password managers can help you shop with multiple retailers by safely storing your credentials, so they are unique for all of your online accounts
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Optimum Finance bolsters its offering in three regions with two new sales directors and commercial director promotion

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Optimum Finance bolsters its offering in three regions with two new sales directors and commercial director promotion 3

Leading invoice finance provider and fintech firm Optimum Finance has appointed two regional sales directors to fulfil the funding needs of SMEs across three UK regions alongside the promotion of Lynn-Marie Jameson to commercial director.

Kelvin Thomas joins the business as regional sales director for Wales and the West and Iain Hendry as regional sales director for the South East.

Kelvin and Iain take up their roles as Optimum Finance embarks on its new growth journey following the appointment last month of fintech expert, Anthony Persse, as new CEO.

The new appointments come off the back of a period of strong growth for the firm which funded over £100m worth of invoices and reported a growth in clientele of 56% in 2019.

Kelvin joins Optimum finance with over 25 years’ industry experience. Having previously held positions as sales director at ABN AMRO Commercial Finance and Eurofactor – Credit Agricole. He is accustomed to delivering strategic regional plans and working within the SME sector to deploy cutting-edge funding solutions.

In his role at Optimum he will be overseeing sales activity in Wales and the West, helping drive Optimum’s bespoke services to those SMEs which need financial support.

With vast experience and knowledge of the South East invoice finance market, Iain is no stranger to working with companies to provide funding options which support business owners. Having worked for Santander, Ultimate Finance and most recently commercial director of Innovation Finance, his industry knowledge is extensive.

When asked about his role, Kelvin said: “Joining the Optimum Finance team has been fantastic. I am enjoying getting to know the portfolio of businesses we work with and how we can help them.

“I am incredibly excited to be focused on expanding Optimum’s offering across Wales and the West delivering strategic plans, deal origination, business development and overseeing mixed asset and product strategies. I’m really looking forward to engaging with SME’s and creating funding solutions for them”

Iain comments on his role: “Given the current circumstances it has never been more important for SMEs to consider invoice finance to support their long-term financial health. In the past I have been part of a team which has provided SMEs with funding solutions to improve cashflow and I am excited to continue to offer this as part of the Optimum Finance team.”

Anthony Persse, CEO at Optimum Finance said: “We are pleased to welcome Kelvin and Iain and to announce the promotion of Lynn-Marie to commercial director. We have an exceptionally strong team in place as well as the drive and tenacity to provide quality, bespoke funding solutions to UK SMEs as they forge ahead in uncertain times.”

For information on the latest job opportunities at Optimum Finance, keep an eye out on https://optimumfinance.co.uk/ or contact the team at [email protected].

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