Planning your 2023 commercial strategy? Consider these 5 digital imperatives for maximizing growth & efficiency in a recession. Learn more
In order to get your bank where it needs to go, all you have to do is change its pricing culture, create a new C-level position, break down siloes, share more information, create a new ecosystem of tools, figure out which tools to purchase and then get everyone to use them once they’re put in place.
If that last sentence just made your eye start twitching or led you to curl up in a fetal position in the corner of your office, we understand. If it seems overwhelming, that’s because it is.
But it’s only overwhelming if you think of it in those terms - as one huge, gargantuan undertaking.
If you take the advice of Lao Tzu and Dave Brailsford though, you’ll have a place to start and a path to follow.
At the risk of being repetitive, let’s go back to what we wrote in Chapter 2, when we introduced the concept of “Price Getting.”
As much as it pains bankers, when it comes to Price Setting, they need to live by the old saying, “Don’t let perfect be the enemy of good.” Pricing is a forward-looking, prospective exercise, and as such, it can get messy.
There is no such thing as 100% accuracy, and bankers (especially the finance types) get uncomfortable with the uncertainty. They know the importance of pricing, so there is an urge to get the assumptions just right. And many, like Frankenstein Bank, will spend years trying to get everything perfected. In the meantime, they are pricing millions of dollars in loans with an old tool that they know is flawed.
Instead, banks should use the “continuous deployment,” mentality whereby they can roll out the improved methodology (After all, it is better than what you have!) and then slowly refine it over time. All of this should happen with the understanding that perfection is <i>not</i> the goal. There will come a point when gaining the extra degree of accuracy is not worth the time, resources, or interference with end users needed to achieve it.
This is an excerpt from the book, "Earn It"