Home Equity Lending Survey Reveals 73% of the Top 22 Banks Plan to Improve Pricing Process: 50% Evaluating Price Optimization Solutions to Enable Profit-Based Pricing

Share Article

Of the 22 top banks that were surveyed, 100% of home equity lenders believe there is room for improvement in their current pricing practices, 73% plan to improve their pricing process in the next two years, and 50% are in the process of evaluating price optimization solutions to enable a Profit-Based pricing approach to achieve their business goals.

Nomis Solutions, the leader in Profit-based Pricing for banking and finance, and BenchMark Consulting International today announced the results of the Home Equity Lending Pricing Practices Survey. Of the 22 top banks that were surveyed, 100% of home equity lenders believe there is room for improvement in their current pricing practices, 73% plan to improve their pricing process in the next two years, and 50% are in the process of evaluating price optimization solutions to enable a Profit-Based pricing approach to achieve their business goals.

During the month of August, BenchMark interviewed key executives responsible for pricing at the largest North American banks. Fifteen of the 22 banks interviewed represented 81% of the home equity loans that are booked in the United States. BenchMark’s survey sheds light on various pricing approaches in practice today, the factors considered when making pricing decisions, and the growing appetite for a profit-based approach to pricing.

Home Equity Lenders’ current pricing practices, such as anecdotal-based pricing - which focuses on rules of thumb or assumptions about the business; market-based pricing - which focuses on the competitive landscape; and risk-based pricing - which focuses on the cost of the product, are leaving money on the table because they are not focused on how much value customers place on the bank’s Home Equity Lending products. According to the survey, lenders recognize that pricing can be used as a strategic lever and that pricing processes can be significantly bolstered to better support the corporate goals of profit and market share growth.

BenchMark Consulting International’s Home Equity Lending Practice Manager, J. Brian King, whose team conducted the survey, said, “I believe that the Home Equity Lending marketplace is going to experience major changes in the next two years. Leading banks are now starting to investigate innovative ways to differentiate themselves and to strategically squeeze more profits in some areas of the business while maximizing market share in others. While conducting this survey, I was impressed by the number of Home Equity Lending executives that are planning to use pricing more strategically to meet their business goals.”

“Home Equity Lenders are beginning to understand the power of Profit-based Pricing and are interested in using this innovative approach to improve the performance of various products such as HELOCs, HELs and hybrid products. Profit improvements range from 10-20% and lenders uncover valuable insights about what their customers really value as well as a real view of how their product portfolio performs against the competition,” said Dr. Robert L. Phillips, co-founder and CTO of Nomis Solutions and author of Pricing and Revenue Optimization. “This much more disciplined and analytical approach to pricing allows banks to analyze gaps and opportunities for improvements, perform “what if” scenarios to test out the impact of various price changes before executing them, and measure results based on how customers responded to a particular price change.”

If you are interested in receiving a free copy of the results of BenchMark Consulting International’s “Home Equity Lending Pricing Practices” survey, stop by Nomis Solutions’ booth at the Consumer Bankers Association’s Home Equity Lending Conference, which takes place from September 10-13, 2006 in Orlando Florida. Otherwise, contact Jakki Geiger at 650-588-9800 x221.

About BenchMark

BenchMark Consulting International has specialized in improving the financial services industry since 1988. The company is a management consulting firm that improves the profitability of its financial services clients through the delivery of management decision making information and change management services to realize the benefits of business process changes. BenchMark Consulting International’s expertise is in the designing, managing and measuring of operational processes.

The firm has worked with 39 of the top 50 (in asset size) commercial banks, all 14 automobile captive finance corporations, several of the largest consumer finance corporations and many regional banks throughout the United States. Internationally, BenchMark Consulting International has worked with the five largest Canadian commercial banks, more than 40 European organizations in 11 different countries, in addition to financial institutions in Latin America, Asia and Australia.

The company is a wholly owned subsidiary of Fidelity National Information Services, Inc. BenchMark has dual headquarters in Atlanta, GA and Munich, Germany. For more information please go to http://www.benchmarkinternational.com.

About Nomis Solutions

Nomis Solutions is the leader in Profit-based Pricing for banking and finance. The Nomis Price OptimizerTM Suite is designed to strategically use pricing to increase profitability while maintaining revenue and market share. Because of the unique needs of each banking and finance business, the suite includes specific solutions for the following: Direct and Indirect Auto Finance, Home Equity Lending, Consumer Lending, Deposits, Mortgage, and Foreign Exchange. Each solution is implemented in less than 10 weeks, provides valuable customer insights, and increases profits within three months. All Nomis customers have achieved 10 times return on investment (ROI). Headquartered in San Bruno, CA, Nomis Solutions has offices in Charlotte, NC, New York, and London, UK. Visit http://www.nomissolutions.com or call 650-588-9800 for more information.

# # #

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Mark Peterson
Visit website