Abstract

Innovations in product and pricing models are becoming a critical requirement in today's competitive financial services market place and are emerging as a key differentiator for financial service providers in their quest to attract and retain customers. One major challenge is to launch innovative strategies with little (or no) disruption to existing host and processing systems. This is a critical factor in obtaining the mandate and approvals for innovative product and pricing initiatives.

Drivers

Competitive pressures compel Financial Institutions to keep up with emerging industry trends in product and pricing innovations such as All-In-One Accounts, Offset Accounts, Relationship Pricing, Branchless E-Banking Discounts, Loyalty and Rewards Programs, Totally Free Checking, etc... In order to maintain market competitiveness in a timely and cost efficient manner, Banks require a flexible and manageable product pricing solution that spans products across the entire Institution. This means that innovations must come without any of the code or data table changes usually associated with core banking application enhancements. Code changes in host and processing systems require significant investment in time and resources and can introduce uncertainties and future inflexibilities.

Solution

miRevenue, the revenue generation, recognition and assurance platform from Zafin Labs offers a practical and effective solution to meet these innovation challenges, enabling financial service providers to launch product and pricing strategies across products and services spread over different host and processing systems.

Virtual product offerings can be created in miRevenue, comprised of individual products from different host applications. As an example, a "College Student Package" could include a Savings Account Product from host system A, a Credit Card Product from host system B and a Personal Loan Product from host system C. As College students are considered strategic based on their future earnings potential, this package could have some special pricing incentives attached, given that only College students are eligible for the package.

Attributes can be defined for miRevenue based upon customer profile information or upon product/transactional data from Core banking systems such as Outstanding Loan Balances, Credit Card Fees for the past month, Minimum Balance on Saving Accounts and any other available data elements. Differential Pricing and Benefits policies are defined based upon one or more such attributes . As an example, if the Average Monthly Balance is greater than $US 10,000 and if the Outstanding Loan Balance is greater than $US 100,000, then perform an action or set of actions. Typical actions could be providing a fee waver or a differential rate of interest, awarding credits or reward points, or providing a discount on a new product.

miRevenue computes the differential rates and prices and applies these as debit or credit entries into nominated beneficiary accounts, mapped through codes that would be recognized by the host and processing systems GL. Once mappings have been established, all pricing and product innovations are defined in miRevenue without any further changes to existing core banking systems.

Benefits

Using miRevenue to manage product innovations allows banks to provide Customer Centric products, packages and pricing based upon the entire value of each customer relationship. In addition, product changes no longer require code modifications to existing core processing systems, allowing for:

• Implementation and testing cycles reduced from months to weeks (or even days)
• Product Managers performing changes rather than IT development staff
• Reduced risk of errors or future evolutionary issues
• Common access to product pricing services through miRevenue SOA Framework
• Reduced processing overhead for core banking application hosts
• Significant reductions in development and operating costs

Conclusion

With a modest, one time, miRevenue installation and mapping effort, Financial Institutions are well positioned to provide fast paced and innovative product advancements supporting Customer Centric pricing, benefits and rewards across their entire product range. While the pace and quality of innovation increases, the costs and associated operational risks are similarly reduced.

<<< back