Technical article

Have you heard? Quo vadis current account? Two current podcasts provide answers!

You can feel it everywhere in the banking and savings bank world: institutions are currently taking a closer look at account models and current account prices. The average current account price has risen by almost 40 % since 2015. Persistent pressure on earnings, untapped price potential – especially in a European comparison – and the “new” approval requirement are three key drivers. The latter, particularly for the savings banks, for example, also in view of the upcoming necessary replacement of the Maestro Card: the next topic requiring consent. It will not be the last. Even the neobanks are increasingly following the path of the universal banks when it comes to current accounts. So why not make a virtue out of necessity and secure earnings and competitive advantages with a new current account strategy?

But what do you need to look out for? How do you do it right? What mistakes should you avoid? Finanz-Szene sheds light on this topic with two current podcasts.

Dr. Peter Klenk, Partner at zeb, reports on pricing strategies at private banks. We have summarized some key facts below. A central statement is that “big leaps [im Pricing] are no longer possible without changes to the service side [nach dem BGH Urteil] “. The pure house bank model also appears to be exhausted. He sees intelligent accounts differentiated by added value as the solution.

Here, our Managing Director Niels Kokkeel explains what this means, how it is done and what the “crazy boom in value-added services” is all about.

Key statements on pricing strategies from the podcast by Dr. Klenk [sic]:

(1) Germany is in the European midfield for account prices. It is only in the top 5 for account management fees.

(2) The average monthly production costs of a current account are € 4-5.

(3) Success factors price increase:

  • Define target image (incl. model structure and targeted price increase per account and on average)
  • Increase benefits and services or adapt them to the new pricing
  • Simulation of the effects at individual level (winners/losers) and definition of suitable migration strategies and support for sales
  • Intensive preparation of sales and customer communication
  • Know your own price premium (especially in the regional competitive environment). In particular the critical price points (key products).
  • It is essential to incorporate the experience gained from the consensus activities (see below)

(4) Brand is still a major selection factor. Price premium of 2-3 €/m is still possible with strong brands and the churn inertia below that is still very high. Both (price premium and inertia) are also much higher overall than for the other bank products.

(5) Price increases without changes to the service side are no longer possible.

(6) The best option for improving the performance side is Value Added Services

(7) Experience from the “first” consensus collection and from countries with a longer consensus tradition (such as Austria). This has led to high approval rates:

  • Good communication: especially concise, e.g. 1 page, clear in the message, lean and transparent, natural, at eye level, use pressure sensitively
  • Sustainability: only send what is absolutely necessary (vs. sending a printed list of services)
  • “Elegant”, intelligent, staggered approval processes (vs. knee-jerk actionism and watering can principle)
  • Consider channel preferences
  • Using data analytics

(8) Major topic for the future: sustainability/greenaccounts and consistent pricing strategies across all products

Click here for the full podcast with all the content.