Multi-channel pricing for financial services

For several years, the financial services industry has discovered the opportunities of different channels like the Internet, call-centers, WAP etc. Many banks built up separate direct banks focusing exclusively on the Internet and/or call-centers. Only recently, some banks started to reintegrate the direct banks with their traditional brick-and-mortar banks in order to offer services over several channels for the convenience of their customers. However, each channel induces additional fixed costs and the channels may influence each others´ turnovers and profits. Therefore, the question of how to price different products and services in different channels arises. In order to solve this problem with regard to profit maximization, banks have to incorporate effects like customer´s willingness-to-pay for certain products and services over different channels, cross-selling interdependencies between the channels and marginal costs of each channel. This paper will provide further insight into multi-channel pricing strategies based on price discrimination models especially discrimination by distribution channel. The innovation of this work will be the consideration of cross-selling aspects.