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Rate Optimization: A Banking Case Study

The Company

A leading American regional bank

The Challenge

The bank historically set rates using pricing models but felt there was opportunity to improve pricing for some customers. The bank had a history of changing rates and hoped to learn from customer response to those changes to inform future strategy.

The Solution

The bank used APT's Test & Learn™ solution to automatically find a set of customers whose rate had changed and a set of customers whose rate stayed the same. These groups of customers were different across key characteristics such as balance, tenure, and income, but the software was able to identify a subset of customers that were comparable across these dimensions. Comparing these similar groups of customers clearly showed the impact of the rate change.

The Results

Using the results, the bank was able to set an optimal rate for each customer, driving $20MM in annual incremental profits.
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