Product Bundling Advantages for Retail Banks

To capitalize on product bundling advantages most banks have either launched or are in the process of launching bundles. Some are even on their second or third generation of product bundling initiatives.  If you are somewhere along this path then you will want to check out the Product Management Summit that Bill Hippensteel, Executive Vice President, Director of Product and Segment Management, BBVA Compass will be leading at the BAI Retail Delivery Conference focused on product bundling and relationship pricing strategies.

Following the lead of other industries such as telecom, banks have long understood and sought to capitalize on the advantages of product bundling:

• increased revenue
• improved customer retention
• enables more competitive, relationship-based pricing
• improved customer satisfaction
• and more…..

However, it is not always an easy journey.  Typically, banks define the product mix, determine profitable terms and conditions of use, articulate features and benefits, launch the product over the web with their advertising team and then realize that they need to operationalize which can be like putting a square peg in a round hole if not considered early in the process.

How to fit a square peg into a round hole.

For example, your bundle includes a deposit product, mortgage, and credit line, so you do your best to create a deposit product definition within your mortgage system so you can have a single system of record.    Even if you can get it to work, this approach is a maintenance nightmare.  You have created a dual-maintenance challenge for the deposit product (it now lives in two places – the deposit system and the mortgage system).  And how are you going to handle revenue allocation across the product lines? What about operational monitoring of the terms and conditions of the bundle (e.g. minimum deposit balance)?

A better approach would be to deploy a central product repository to store product bundles with the appropriate links to existing core systems.   ProductAuthority®, is an innovative product development and management solution that enables banks to successfully build, bundle, and market products by implementing a more agile, efficient and cost-effective approach to product lifecycle management. All product data and rules from multiple, hard-coded legacy systems are externalized into a central product repository where product bundles can be easily configured and modified. Product bundles can be created quickly by combining existing products and common components such as overdraft protection and fees. Rules for allocating revenue across multiple business lines are defined directly in the bundle.

To learn more about flexible and efficient ways to package and price your products click here

A better approach would be to deploy a central product repository to store product bundles with the appropriate links to existing core systems.