Delivering on the SME Pricing Opportunity at a Major Bank
Find out how BCG worked with a leading bank to turn pricing ideas into rapid bottom-line impact in SME banking.
SME Bank is a major universal bank with a strong small and medium enterprise franchise. However, financial performance was suffering as risk-adjusted margins eroded and the riskiness of the loan book grew.
SME Bank asked BCG to investigate pricing as a lever to return to profitable growth.
BCG conducted a three-part diagnostic focusing on
risk-based pricing to achieve the desired profitability and risk profile
deep-dive assessment of individual products and bundles versus competitors
alignment of front-line and senior management objectives, performance management systems, and behaviors
BCG then pulled together the opportunities into an implementable roadmap, including opportunity prioritization, scoped initiatives, resources and accountabilities, and timelines.
BCG analysis broke multiple pricing myths at SME Bank, such as the belief that high discounts were justified to acquire clients that would later be sold more valuable cross-sell products. Other insights included the finding that low prices did not reduce customer churn and that client sensitivity to price was lower than many salespeople believed.
BCG recommendations allowed a sustainable profit lift of 10-15%, realizable within two quarters and with minimal IT investment. BCG also identified a set of longer-term capability improvements planned to deliver further ongoing profit lifts.