The Art of Simplifying Complexity in Banking Products


How many products does your Bank offer? If we ask your customers they may say, “3 types of checking accounts, several term CDs and a few credit cards.” Perhaps a better question for the purposes of this blog post is: For every product your customers see, how many versions of the same product are defined in your core system to address variances in your targeted customer segments? 

When considering the range of banking products your institution offers, the question isn’t merely how many there are, but rather how these offerings are structured to meet diverse customer needs. For each general product type visible to customers, like checking accounts or credit cards, there often exist numerous tailored versions in your core system designed to serve different customer segments effectively. 

Banks today are not just providing generic financial products; they are offering personalized solutions crafted through careful segmentation and customization. This approach is essential for delivering personalization at scale but comes with its inherent challenges. Case in point, a Naehas customer had a Certificate of Deposit product represented as 84 different products with minor differences in its core banking system. 

An approach to simplifying these complexities, often part of banking core modernization programs, is through the implementation of Enterprise Product & Pricing solutions such as Naehas Enterprise Product & Pricing, as it provides a strategic approach to managing the inherent complexity of product offerings and pricing structures. Enterprise Product & Pricing solutions are designed to centralize and streamline the creation, management, and pricing of financial products, allowing banks to respond more quickly to market changes and customer demands while maintaining compliance and operational efficiency. 

Some of the benefits from incorporating an Enterprise Product & Pricing solution include:

1. Increased Operational Efficiency

Increased product personalization doesn’t have to mean an increase in product definitions in your core banking system. Externalizing and enhancing Product & Pricing definitions outside of the rigid product templates offered by legacy cores helps reduce systems management complexity, system administration and customization (i.e., development) costs, and reduces compliance risk. 

Streamlining operations enables more coherent strategy formulation and execution, as well as simplifies training and onboarding for new employees. This not only cuts costs by reducing redundancies, but also allows you to allocate resources more effectively to focus on providing better products and services.

2. Improved Risk Management

Every product in your portfolio carries its own risk profile, including credit risk, market risk, and operational risk. Managing these risks across numerous products in silos can dilute your ability to monitor and control them effectively. 

Naehas Enterprise Product & Pricing acts as a single source of truth for all product-related information. It consolidates data from various departments and systems, reducing discrepancies and ensuring consistency across the bank. This not only simplifies the risk assessment processes, but also enhances the quality of oversight and control.

3. Faster Response to Market Changes

Competition is fierce and the knobs and dials that control the health of the business need to be more in sync than ever, while turning faster than ever, with increased fine-tuned precision. Dynamic pricing is the automated digital replacement of these knobs and dials, allowing you to be more competitive and responsive to market changes. With dynamic pricing, adjusting the prices of your products or services in response to various market factors — such as demand changes, competitor pricing, and cost fluctuations — while staying within the parameters required for regulatory compliance, becomes a tangible competitive advantage. For example, if a competitor lowers prices or increases an offer incentive, respond quickly by adjusting your own prices and offers to stay competitive.

Automate the application of different pricing strategies, such as risk-based pricing, relationship pricing, or promotional pricing. Personalize pricing for your customers, enhancing customer satisfaction and retention, and preventing revenue loss to competitors who might target niche segments more effectively.

4. Innovate Faster or Start Innovating

With streamlined operations and the newly found agility brought by the business-user friendly configurability of the Naehas Platform, you are now able to update existing products and introduce new offerings more efficiently, opening the door for experimentation through fast iterations which can lead to discovering more effective ways to capture market share and increase customer loyalty.

Additionally, by breaking down silos and encouraging cross-functional teams to work together on product and pricing strategies as well as offers and disclosures, it fosters a more innovative organizational culture where diverse perspectives can lead to more creative and effective regulatory-compliant solutions.

Enabling innovation at your financial institution creates an environment where the creation of cutting edge financial products can enhance your bank’s reputation as a leader in innovation, helping attract top talent and capturing the loyalty of tech-savvy customers.

5. Enhanced Compliance and Easier Scalability

The centralized nature of the Naehas Enterprise Product & Pricing solution simplifies the management of multiple product lines and ensures consistency and compliance across all offerings.

To support fast adaptation to market or regulatory changes without the need to overhaul entire products, the Naehas Enterprise Product & Pricing solution adopts a modular product design approach where the core features of a product remain stable (as defined in the banking core), and are enhanced through the solution’s configurable and customizable modules (such as interest rates, reward schemes, or eligibility criteria) which can be attached or detached based on your needs and market conditions.

The scalable nature of this approach means that as the bank grows, either by expanding into new markets or offering new types of products, the Naehas Enterprise Product & Pricing solution can scale accordingly without significant retooling or investment in new technology. Scalability is further enhanced by the ability to replicate successful product templates across different regions or customer segments, adjusting only the specific modules necessary to meet local requirements or preferences.

Transforming Products for Enhanced Customer Value

Leveraging Enterprise Product & Pricing solutions, banks can manage their existing product offerings more efficiently while fostering an environment where innovation is easier to pursue and more likely to succeed. Because the Naehas Enterprise Product & Pricing solution provides you with the flexibility and control necessary to adapt to market changes through creative and effective products and pricing strategies, it ultimately helps drive business growth and customer value.

Simplifying the complexity associated with your banking product definitions is not just about becoming more efficient; it is about enabling you to offer better products. It’s a strategic move towards creating more value for both the bank and its customers, supporting sustainable growth while strengthening your position in a competitive marketplace.