Using an MCIF to Price Products.

• Author: Coffey, John J.

One of the first things you learn in marketing is that you shouldn't sell your products by lowering prices. You've probably also learned that you should always try to differentiate your products and services from your competition so you can sell based on value. But how do you create value when the public perceives bank products as mere commodities? A CD is a CD is a CD. Who's got the highest rates? Isn't that all that matters?

Fortunately, an MCIF can help you understand the relationship your customer has with you so you can sell them products they need when they need them, at a price that is best for the customer and the bank. After all, don't you want to make your best product offers to your best customers?

Which MCIF reports are useful for asset/liability management?

An MCIF can be a powerful asset/liability tool. One of the most versatile reports in an MCIF is a product summary report. This report breaks out your products into separate portfolios. It can also illustrate the number of accounts, balances, weighted average rate, net interest income, noninterest income, noninterest expense and profitability for each subproduct, product, group or service. You can use this information to increase your net interest income and increase your noninterest income for a particular product.

Another useful report is the date analysis report, which shows households with maturing CD or loan balances in a given time period. By segmenting this report based on profit and the number of services a customer has with the bank, you could offer a better CD rate or a better loan rate for your most profitable customers who have multiple services--when they need these services!

How do you use historical funds transfer pricing data within your MCIF to price your products?

One of the most exciting developments in the MCIF industry is the use of historical funds transfer pricing (FTP) data within an MCIF. With FTP, a bank's loans are given a funding rate and its term deposits...