Managing Risk & Maintaining Margin – Credit Card Portfolio Pricing

September 7, 2017

How do I manage risk in my credit card portfolio and continue to price appropriately in this ever-changing environment?”

This balancing act is one that keeps lenders in a perpetual cycle of alteration. As a financial services consultancy, we’ve observed this common client need many times and as a result, we developed a customizable re-pricing model that is easy to implement and use, which has helped clients beat the balancing act with a strategy that also saves time and money.

Challenges of Time, Resources and Focus

Many lenders have experienced one or more of these barriers when developing a consistent and transparent re-pricing strategy that accounts for risk:

  • Thinly stretched analytical resources without bandwidth to explore multiple pricing scenarios to identify a strategy most likely to drive optimal returns
  • Departmental differences in how to measure financial outturn, making direct comparisons and sign-off more labor intensive, for example:
    • Finance teams often focus on a P&L outturn, including capital requirements and cost of funds whereas pricing teams likely turn to yield metrics or customer attrition as measures of success
  • Operational costs and impacts are sometimes disregarded or are not fully understood to form part of the decision-making process

Risk-Based Pricing Model Offers Flexibility and Thorough Strategic Outcomes

The Bridgeforce model enables pricing strategy teams to mock up and iteratively refine re-pricing strategies. Teams can leverage Big Data via a Microsoft Excel front-end to fully understand the extent to which key outcomes are impacted by changing parameters. This re-useable model requires no coding skills or IT integration/support and outputs are tailored to each interested audience. Bridgeforce works with teams to tailor the model to specific needs, leveraging our independence and strategic expertise in the process.

This visual shows the simplicity of the model and the inputs that can be reviewed to make consistent and transparent decisions on pricing strategies.


Realizing Immediate Benefits

Groups who have used this model have experienced an upside averaging $150 per account in income over a three-year period. The model provides additional benefits for any re-pricing campaign.

Challenges of time, resources and focus in risk-based pricing are evident across the industry, despite the importance of this strategic lever for portfolio performance. With decades of industry experience, Bridgeforce has developed a customizable re-pricing model to help clients achieve a balance of risk and profit margin in pricing strategies, while saving time and money. Plus, the model is easy to use and to implement.

Contact us today for more information or to arrange a demo. We would be happy to review your specific needs and help you understand how our model could help.