Using Segmentation Strategies to Minimize CD Funding Costs
- Topics:
- Pricing Strategy
- Source:
- Farin & Associates
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Overview: It has been seen that to effectively minimize funding costs through effective deposit pricing decisions, one needs to do three things: Implement an effective deposit pricing process, use financially sound pricing tools in making pricing decisions, use segmentation techniques to avoid paying up for non-rate sensitive deposits. An effective deposit pricing process includes: making sure one has the right kind of information to make decisions, dividing deposit accounts into sectors, developing a pricing rule for each sector. The financially sound pricing tools only need to be applied when the answer to the “Is pricing strategy still working?” question is ‘NO’. At that point, one uses the tools to establish a new pricing strategy for the sector.
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Format: PDF | Size: 78KB | Date: Nov 2002 | Pages: 9
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