WORLD RETAIL BANKING REPORT

Price Analysis The average price for active users decreased 1% this year. Prices followed a similar evolution this year for local less active users (-0.1%) and for local very active users (-0.9%). To assess why banks have changed their prices for certain products, we have classified banking products into three categories according to their impact on customers: Sales influencers : Products whose prices primarily affect a consumer's decision to buy banking services or change banks. Current accounts and credit/debit cards fall into this category, because theirs are the only prices consumers commit to pay up front when they open an account or buy a card. Behaviour influencers : Products whose prices influence a consumer's behaviour, but fall outside the direct buying situation. We have split them according to their production cost for banks: Less-costly products for banks: On-line banking, deposits and withdrawals at ATMs, direct debits, transfers, and standing orders More-costly products for banks: Call centres, deposits and withdrawals at desk, withdrawals at other banks' ATM networks, cheques Unseen services : Services for which consumers have to pay without having had any choice or decision, such as exceptions handling.Based on this product categorisation, we analysed banks' pricing policies from 2006 to 2008 to understand their actions and underlying objectives (see Figure 1.5). Banks built loyalty and won new clients by reducing prices on sales influencer products, which they cut by 0.8% a year. Banks also reached for this objective in several markets by creating packaged offerings. Many banks reduced their cost of operations by influencing clients' behaviour, using the prices of behaviour influencer products to move their customers towards less expensive channels or payment means and away from more expensive products and services. Banks cut the average price of the less-costly behaviour influencer products by 0.2% a year to encourage their adoption. At the same time, they increased the price of the more costly influencers by 0.9% a year to discourage customers from using them. They might also have enhanced their earnings by raising prices on unseen service products, yet most banks let these prices stand, at least partly held in check by consumer associations or regulators.download