Methodological aspects of retail deposit pricing

Abstract

Purpose: The article is devoted to improving the pricing of retail deposits under bounded rationality of depositors and existence of transition costs when changing the bank. Discussion: Efficient pricing of retail deposits makes it possible to minimize costs and increase the customer base of the bank. Author identifies the major trends in the market of retail deposits in Russia: the efficient functioning of deposit protection, technological innovation service, government regulation of the level of deposit rates, the decline of loyalty and increased mobility of depositors. To reduce price competition on the market, banks need to reconsider the approaches used to pricing. Traditional approaches do not provide a solution to maximize the objective function (profit, market share or volume of deposits) for nonlinear relationships set of model parameters. Author proposes to apply agent-oriented model that is based on the conduct of the computational experiments. It enables to integrate depositors' behavior parameters into the model like transition costs, the limited abilities to monitor the market and subjectiveness in interpreting market data. Results: The article discusses that current trends in the deposit market create the preconditions to improve the traditional approaches of pricing. The author proposes the use of agent-oriented model in the development of the bank's pricing policy, which allows to take into account bounded rationality in the behavior of retail depositors.