Optimize Top-Line Growth with Smart Revenue Management

The financial services industry is currently facing a series of unprecedented challenges. Interest rates that were already at historic lows are declining even further, driven down by widespread economic instability. This is due in no small part to the COVID-19 pandemic, which has had a number of direct and indirect effects on banking and financial services as a whole. Specifically, wealth management revenues have taken a hit and capital market declines have diminished the value of clients’ assets under management. At corporate banks, loan applications are on the rise in response to prolonged lockdowns and stay-at-home orders; meanwhile, the inverse is happening at retail banks where loan applications have all but come to a screeching halt. All of these can have an impact on a financial institution’s ability to remain profitable.

Sensible pricing and revenue management can be a boon to financial institutions that have been rocked by these recent changes and will likely continue to feel the effects of these global events for years to come. Modernizing the systems that are used to perform these core operations will help optimize top-line growth. Consider implementing the following approaches into your revenue management and billing strategy:

Identifying, seizing, and making the most out of all revenue opportunities

Research shows that one of the foremost reasons behind revenue leakage in financial institutions comes down to disparate pricing and billing processes. Between 3 to 8% of an organization’s income can simply evaporate into thin air from this, resulting in losses in the millions of dollars.

Making matters worse is the fact that pinpointing the reasons behind missed revenue opportunities can be quite the challenge. There are several factors that can contribute to it: inconsistent or siloed business practices, failure to track commitments and their fulfillment, inadequate pricing controls, and lack of accountability can all cause revenue loss.

The solution, then, is to have a 360-degree view of the entire customer revenue management and billing life cycle in order to detect where the pain points are. Insight is invaluable: knowing how much revenue the business is losing and how much it is affecting their profitability is an excellent, and necessary, first step. Performing a thorough analysis of how these losses are occurring by taking a closer look at who (customer segments), where (geographic regions), and what (product types) could be causing them can also help financial institutions get closer to resolving revenue leakage issues. A system that combines end-to-end visibility with powerful analytical capabilities should help enterprises keep a closer eye on their financials and achieve both greater clarity on revenue position and improved delivery on commitments.

Offering more flexible pricing strategies and improving transparency

One of the most noticeable trends in recent years in both corporate and retail banking involves a greater demand for customizable and personalized products. The customers who want them also expect them to be priced based on their current and future relationship with their financial institution.

This presents an interesting challenge for banks who must now take on the responsibility of delivering balanced offerings that clients will consider valuable, without sacrificing profits. This can be quite difficult, given the fact that consumers are becoming savvier about pricing vis-à-vis the perceived value of the product they are being offered.

Consumers are also now more interested in knowing and understanding how costs are calculated and what they stand to gain from paying for certain services. This is another emerging trend worth noting, especially in corporate banking, where clients now expect more transparency from the financial institutions that they work with.

Banks that wish to get ahead in the game may want to consider focusing on acquiring a better understanding not just of what their clients want, but also what their goals might be. Combining this knowledge with transparency and customer education can enhance a financial institution’s relationship with their clients. It will also push innovation, empowering banks to create new products that are better suited to both the customer’s specific situation as well as current realities.

Improving efficiency through modernization

Most financial institutions are still using legacy systems and manual processes to perform core functions related to pricing, billing, and collections. And while these methods may still work in the interim, they are quickly becoming out-of-date and obsolete. Being product-centric instead of customer-centric, they fail to meet the needs and expectations of the market at present. They are also error-prone, redundant, and costly to maintain. Legacy systems and approaches also lack agility and scalability, hindering financial institutions from reacting swiftly to current events and maximizing their full potential.

Switching from disparate systems to a modern, unified pricing and billing platform can solve these issues. In addition to simplifying the way pricing, billing, and collections are managed, they are also faster and significantly more secure. Platforms like these can also leverage automation and data analytics to vastly improve the experience for customers and guide financial institutions towards business decisions that will benefit them and their clients.