Smart Use of Pricing Can Help Banks in the Battle for Deposits"Unprecedented turmoil” is among the phrases most commonly used to describe the current state of banking. And, indeed the last few months have seen an historic rate of failures, near-failures, and acquisitions combined with a rapid tightening of credit. Amid all this turmoil, it is easy to forget that the basic business of gathering deposits and making loans is not going to disappear. In fact, as banks look for ways to survive the current environment, more careful management of the core businesses of lending and deposits will have a high priority. In this article, Dr. Robert Phillips, founder and CSO of Nomis Solutions, explains how pricing and profitability management can help bank executives break through the current market conditions and prepare themselves for the future.

Two years ago, the truth dawned on Kelly Mankin and his cohorts at Chrysler Financial."

The simplest way to put it is that we realized one day that our pricing was effectively all art and very little science," said Mankin, the auto financing company's vice president for marketing. "There were multiple examples in the company where we employed demand models in other areas, so why not pricing?"

Banks are falling in love all over again with consumer deposits; add to this newfound affection the industry's new entrants Goldman Sachs, Morgan Stanley and American Express - and what you have is an exceptionally competitive environment for deposits at the same time that consumers are more predisposed than ever to switch banks, thanks to the high-profile bank failures during the last year.

The winners of this deposit war are likely to be those banks that can incorporate pricing-and-profitability techniques, analysts say. At a very basic level, pricing and profitability optimization is understanding at a very granular, segmented level, what the price elasticity and demand is for different types of deposit products in different parts of the market, says Frank Rohde, vp of product development and chief marketing officer for San Bruno, CA-based vendor Nomis Solutions.

"We've partnered with Nomis Solutions to use a more customer-centric and tailored approach to pricing that will enable us to price our unsecured loans business appropriately and prudently," says Simon Beresford, head, consumer lending, Nationwide Trust. "The Nomis Price Optimizer enables us to understand the impact of pricing on customer response and use that insight to make smarter pricing decisions in this difficult environment."

Nationwide has made changes to the way its personal loans are priced by introducing personalised pricing.

This new approach will enable the Society to offer a more competitive range of loan rates to customers, while at the same time maintaining its prudent stance on affordability and risk. To ensure that Nationwide maintains its values of openness, honesty and transparency, customers will be able to receive an individual quotation based on their personal circumstances.

Nomis Solutions announced last week that its acquisition of London-based Perspecta LLC will improve its ability to help U.S. lenders more profitably and efficiently manage impairment risk, prepayment risk and cross-sell opportunities in their existing portfolios.

Impairment risk is now number one on the boardroom agenda, says Frank Rohde who explains how Customer Portfolio Optimisation can help to improve profitability

Nomis Solutions, the leader in Profit-based Pricing for banking and finance, today announced its acquisition of Perspecta, LLC, a privately owned London-based software company. With the acquisition, Nomis Solutions bolsters its ability to serve the mortgage market and improve customer portfolio management.

Nomis Solutions Inc., a provider of price optimization software for financial products, has bought Perspecta LLC, a maker of customer management software for the mortgage industry, for a combination of cash and stock.

What is the most intelligent way to manage mortgage churn in current market conditions? Nick Young and Glyn Smith explain a method using prepayment and impairment risk

As the crunch sets in, it may be necessary for managers to seek a radical pricing solution and implement a price optimisation scheme, says Robert Phillips

Nomis Solutions, the leader in Profit-based Pricing for banking and finance, announced today the hiring of three key positions within its Global Services organization.

HBOS, a major European bank, has renewed its license with Nomis Solutions, a company engaged in pricing optimization for banking and finance, for the Nomis Price Optimizer.

By engaging Nomis Solutions and implementing the Nomis Price Optimizer, AmeriCredit quickly achieved increases in market share and profitability, as well as a more strategic approach to pricing.

HBOS has renewed its license of the Nomis Price OptimizerT, with Nomis Solutions, a provider in pricing optimization for banking and finance.

Alex Park, a senior manager for pricing with HBOS' unsecured personal loans unit, said in a Nomis press release that the technology has become an important part of his company's pricing strategy and has provided numerous "insights about our customers and our product performance, which we've used to advance our pricing practices and processes."

"As one of Nomis Solutions' first customers, HBOS has been instrumental in helping us advance our solution and our delivery process," said Ian Pollard, head of sales for Nomis Solutions Europe. "HBOS has benefited from being an early adopter of pricing optimization. We are pleased that HBOS continues to generate value from the solution and our relationship."

"Since working with Nomis Solutions our pricing team has achieved both strategic and operational benefits. We continue to gain insights about our customers and our product performance, which we've used to advance our pricing practices and process," said Alex Park, senior manager, Pricing, Unsecured Personal Loans at HBOS.

HBOS, a major European bank, was the first bank in the world to use Nomis Solutions' pricing optimization solution. Now in its fourth year at HBOS, the Nomis Price Optimizer has been a component of HBOS' pricing strategy and process.

"Everyone agrees that banks and other lenders will need to be more careful going forward when evaluating potential borrowers, certainly in the subprime area, but also in the prime market. As an extension of this shift, says Robert Phillips, chief science officer and VP, research and development, with San Bruno, Calif.-based Nomis Solutions, since the credit crisis came to a head he has seen more investment in his company's price optimization solutions. To Phillips, however, banks' push to price products more strategically has a deeper meaning.

"What this says is that banks are looking beyond the world of price optimization and they're hungering to really understand their customers," Phillips explains. "They haven't done a good job of this in the past. So rather than just advertising better rates, there's a real desire to know the customers better. The winners will be those who can understand their clients at a deeper level. They'll want to take a lifecycle view of their customers, looking across products and time from the initial acquisition decision."

"A new, collaborative pricing model enables us to take a more proactive approach and use pricing strategically to drive performance," explained Kelly Mankin, vice president of marketing at Chrysler Financial.

"We chose to work with the Nomis Solutions team because of their proven track record and experience in pricing optimization as well as their solid understanding of the auto finance business," he added.

Nomis Solutions, a provider of profit-based pricing for banking and finance, announced Chrysler Financial has selected the Nomis Price Optimizer for Auto Finance to invest in new pricing technology.

A top five US bank's home equity lending business increases profits and volume by 4.9 percent and 15.5 percent respectively.

"By implementing a pricing optimization solution, we've gained a significant advantage that allows us to better maintain our advantage in the volatile home equity environment," says the Vice President of Home Equity Lending.

"The Nomis Offer Optimizer arms frontline staff with the tools they need to understand the benefits and tradeoffs of different offers," explained Frank Rohde, chief marketing officer and vice president of product management at Nomis Solutions. "It empowers them to make smarter decisions that meet dealer and customer needs while supporting corporate profit and revenue goals."

Savvy executives are examining their pricing strategies - the second most important driver of performance and perhaps now the last area that can be influenced to really impact financial goals. Changing the price of a loan product today can affect the profitability of your portfolio for years to come.

The Nomis Price Optimizer 3.3. solution combines pricing analytics, optimization and execution with a more advanced pricing process. It provides pricing executives with the insights, automation and capabilities necessary to use pricing as a strategic lever to achieve performance objectives and implement price changes more dynamically and with a high level of accuracy.

Lenders are being urged to take rational measures in response to the ongoing mortgage slump by examining their current pricing analytics.

Dr. Robert Phillips, founder of Nomis Solutions, said lenders should adopt a more fruitful pricing policy, rather than focusing on minor changes to underwriting.

"As the value of product portfolios reaches into the billions, minute differences in interest rates can have a material impact on overall bank profitability. Pricing and revenue optimization, also referred to as profit-based pricing, represents a movement toward greater precision in th pricing process."

Toronto-based Royal Bank of Canada (US$605 billion in assets) is taking a more targeted approach to analytics, deploying the technology specifically in its lending business. According to Neil McLaughlin, the bank's vice president of personal lending, analyzing the right price points for its customers is one way to keep them from leaving.

"There are many benefits to pricing the loan right in the first place. By using analytics tools to dovetail our pricing and personal marketing strategies, we were able to tackle problems we had around our relationship strategy," McLaughlin explains, adding that the bank is employing price optimization software from Nomis Solutions.

We rolled it out for originations initially," he says. "We tested it geographically and did a pre/post analysis to look at the spreads within those geographies. We saw positive results from selecting a better price for loans. We were able to go underneath and understand where the customer sees value in the product."

Gone are the days when everyone with a 720 credit score gets offered the same rate on a $50,000 home-equity loan. Some banks are coming up with different rates for as many as 20,000 customer segments - defined by variables like location, loan type, transaction history and banking habits.

This is the first time that Profit-based Pricing in banking has been addressed in a consumer-oriented publication with a wide circulation (SmartMoney Magazine reaches about 3.5MM consumers). While the coverage was balanced and well-researched, there is a risk that pricing optimization will receive negative publicity if it is not managed correctly. Below, we offer you some key information on how to manage this risk: Impact of Pricing Optimization on Consumers

"We're very excited about Alan joining our Nomis Global Services management team. His experience forging strong customer relationships and delivering high-value services will help us ensure that our UK customers are successful with their pricing optimisation initiatives," said Matt Kuckuk, Nomis Solutions' Vice President of Global Services.

"Royal Bank is using the software for its unsecured lines of credit and plans to start using it for auto financing by midyear and for installment loans by yearend," Neil McLaughlin, Royal Bank's vice president of personal lending, said. "Effective loan pricing is important to Royal Bank's "full relationship" banking model. The credit experience is very much a moment of truth. Getting that right is very important to us."

Nomis Solutions, a provider of pricing optimization solutions for banking and finance, has announced that Royal Bank of Canada has deployed its pricing optimization technology, the Nomis Price Optimizer 3.3 across its personal lending business.

Nomis Solutions, the leader in pricing optimization for banking and finance, today announced that RBC (RY on TSX and NYSE), has deployed Nomis Solutions' pricing optimization technology, the Nomis Price Optimizer 3.3 across its personal lending business.

Nomis Solutions has announced that RBC has deployed the Nomis Price Optimizer 3.3 across its personal lending business. RBC, which is the master brand name of Royal Bank of Canada, is Canada's largest bank and one of North America's leading diversified financial services companies. RBC selected Nomis to help build upon its pricing practices and better tailor offers to customer segments, according to the manufacturer.

Nomis Solutions' Chief Marketing Officer and Vice President of Product Management, Frank Rohde, stated, "RBC will use the Nomis Price Optimizer across multiple lines of business, to better execute on their customer-centric approach and to quickly identify opportunities to grow their business."

US academic and business expert Dr Robert L Phillips believes that with 1.4m mortgage loans up for review in a very tricky market, UK lenders should be reevaluating their strategies for acquisition and retention pricing.

Today, the Nomis Price Optimizer for Auto Finance is AmeriCredit's full-spectrum pricing and profitability solution, which has enabled our pricing team to significantly increase profits. In the first quarter of full deployment, the return generated by the profit-based pricing initiative was over $4 million.

In a recent survey of pricing managers across the top 30 banks and finance companies in the US and Canada, 90 percent admitted that their pricing process was in dire need of improvement. Executives in the top 10 banks in the US admit privately that their ability to use pricing to drive business results is limited.

Lawrence Whittle, Managing Director, UK and Europe, Nomis Solutions confirms: "Working with the top banks and finance companies around the world, we have discovered that the pricing process is one of the most undervalued processes in the industry and better understanding customer response presents significant opportunity for profit and volume improvement in the order of 10-20%."

Price-optimization software would also buoy results, she notes, allowing institutions to use "one thousand different prices points." Auto finance company AmeriCredit has implemented the Nomis Price Optimizer and garnered $4 million in efficiency gains in the first quarter of its use, for example.

Financial institutions spend millions collecting and storing transaction and customer data. The profit-based approach allows them to leverage this information to price their loans to achieve their objectives. Nomis does this via software that puts this information into a virtual dashboard that allows lenders to push and pull levers on a loan-by-loan basis.

Nomis Solutions recently announced it is providing Nomis Price Optimizer for Auto Finance to the Ford Motor Credit Company, the finance arm of Ford Motor Company. Ford Motor Credit is using the Nomis Price Optimizer in its U.S. and Canadian markets to tailor standard and subvened loans and lease prices to meet volume and return on equity goals.

Nomis Solutions, a leader in profit-based pricing for banking and finance, recently announced that it is now providing Nomis Price Optimizer for Ford Credit. According to officials, Ford Credit is using the Nomis Price Optimizer in its U.S. and Canadian markets to tailor standard and subvented loans and lease prices to meet volume and return on equity goals.

Nomis Solutions, the leader in profit-based pricing for banking and finance, today announced that it is providing Nomis Price Optimizer for Auto Finance to the Ford Motor Credit Company, the finance arm of Ford Motor Company and one of the world's largest automotive finance companies. Ford Motor Credit is using the Nomis Price Optimizer in its U.S. and Canadian markets to tailor standard and subvened loans and lease prices to meet volume and return on equity goals.

Steven Mankoff was appointed to the board of San Bruno's Nomis Solutions Inc. He is former SVP, global and technical services at Siebel Systems.

"Ford Motor Credit is a major automotive finance company with a very strong internal forecasting and optimization analytics modeling team," said Frank Rohde, CMO and vice president of product management at Nomis Solutions. "We are delighted to be working with Ford Motor Credit to help them serve their customers and dealers and continue providing value."

"By using the Nomis Price Optimizer, we are armed with a solution that enables us to better and more proactively manage the dynamic and volatile lending environment with interest rate changes, competitor moves and changing internal goals," stated Tom Schwartz, vice president of profitability analytics at AmeriCredit. "We have also improved our ability to execute on our pricing strategies across product lines and channels, which empowers us to better meet our customers' and dealers' needs and to increase shareholder value."

A month after adopting Nomis Solutions' Price Optimizer 3.2 software, AmeriCredit Corp. has already rolled it out across its core indirect auto portfolio. Next in line: loans originated by AmeriCredit acquisitions Bay View Acceptance Corp. and Long Beach Acceptance Corp., as well as those made directly to consumers.

The Nomis Price Optimiser is one of three finalists in the "Most Innovative New Product" category for the European Banking Technology Readers' Choice Award, says eMediaWire. The Readers' Choice Awards were created to recognise that financial institutions are increasingly turning to independent software providers in search of solutions to address a range of issues that would once have meant an expensive bespoke development.

By improving their ability to analyze and assess customer transaction history data and use that ability to make future decisions, financial institutions can move past risk-based pricing to profit-based pricing. That allows them to first optimize prices within existing segments, then fine-tune customer segments for even more precise pricing, according to Robert L. Phillips, founder of Nomis Solutions Inc. Such innovative pricing strategies can significantly improve both profits and volume on retail loans, he says.

"Since customers ultimately vote with their wallets to express their needs, there is no asset more valuable than customer transaction data. The ability to analyze this data and develop a comprehensive understanding of customer preferences will help answer important questions, verify past decisions, and inform future decisions."

Pricing optimization is enabling bank executives to use pricing as a strategic weapon to meet their corporate objectives and to become more customer-centric in their decision making. It also enables a much more efficient and effective pricing process. Banks that are using pricing optimization technology are gaining valuable insights about how customer preferences
impact portfolio performance.

"Pricing in many organizations has been buried; it's sort of been a secondary focus area for another department and we're now seeing a shift that more focus is being put on pricing because there really is a lot to be gained by doing it right. At the end of the day you're pricing to what is right for the customer."

Nomis Solutions Inc. of San Bruno, Calif., has hired Karen Beale as a vice president in charge of North American sales, and Todd Spartz as a vice president and the chief financial officer. They will report to Dennis Stradford, the chairman and chief executive officer. Ms. Beale was a vice president and integrated client network leader for large North American banks at Fair Isaac Corp. in Minneapolis. Mr. Spartz was the vice president of finance and the corporate controller for Openwave Systems in Redwood City, Calif. Before that, he had been the vice president of finance for Metareward in San Mateo, Calif., a subsidiary of Experian.

Todd Spartz joined Nomis Solutions Inc. of San Bruno as vice president and chief financial officer. He previously was vice president of finance and corporate controller at Openwave Systems. Also, Karen Beale was named vice president of North American sales. She previously was a vice president at Fair Isaac Corp. Frank Rohde was named vice president of product management and chief marketing officer. He previously was vice president of sales and marketing at Nomis. Matt Kuckuk was named vice president of global services. He previously worked at Actuate Corp

The San Bruno provider of price optimization software for financial services appointed Matt Kuckuk vice president of global services. He has more than 25 years of professional services management and operations research experience.

Nomis Solutions has appointed Todd Spartz as vice president and CFO. He joins the software company from Openwave Systems, where he was vice president of finance and corporate controller. He has also served as vice president of finance with Metareward, and he has worked at Oblix (acquired by Oracle), Extreme Networks, Aspect Telecommunications, and Applied Materials.

Nomis Solutions, a provider of profit-based pricing for banking and finance, has announced that AmeriCredit, an independent automobile finance company, has adopted its approach enabled by Nomis Price Optimizer for auto finance.

AmeriCredit Corp. has revamped its pricing strategy with a technology system developed by San Bruno, Calif.-based Nomis Solutions.

Nomis Solutions, the leader in Profit-Based Pricing for banking and finance, today announced that AmeriCredit Corp., a leading independent automobile finance company, has adopted a Profit-Based Pricing approach enabled by Nomis Price Optimizer for Auto Finance.

Nomis Solutions, a provider of profit-based pricing for banking and finance, announced that AmeriCredit Corp., an independent automobile finance company, has adopted a profit-based pricing approach enabled by Nomis Price Optimizer for Auto Finance. The introduction of a profit-based pricing approach is a key component of AmeriCredit's full-spectrum pricing strategy.

Nomis Solutions, today announced that AmeriCredit Corp., a leading independent automobile finance company, has adopted a Profit-Based Pricing approach enabled by Nomis Price OptimizerT for Auto Finance. The introduction of a Profit-Based Pricing approach is a key component of AmeriCredit's full-spectrum pricing strategy.

Industry observers like Britting predict automated pricing software will gain traction and may soon become the dominant way the largest banks determine what to charge customers for loan and deposit instruments. She forecasts that 90 percent of giant banks with more than $70 Billion in assets will use the software by 2010.

According to a recent Gartner Report, more than 55% of the banks in the United States are using some form of price optimization and 75% plan to have some system in place within the next five years.

Washington Mutual, one acknowledged early adopter, is using a price optimization solution from Nomis Solutions, San Bruno, Calif., as part of a strategy to hone its home equity business. Halifax Bank of Scotland, which was Nomis Solutions' first bank client, is using price optimization to refine its personal loans program.

The Nomis Price Optimiser is one of three finalists in the "Most Innovative New Product" category for the European Banking Technology Readers' Choice Award, says eMediaWire. The Readers' Choice Awards were created to recognise that financial institutions are increasingly turning to independent software providers in search of solutions to address a range of issues that would once have meant an expensive bespoke development.

Each year Mortgage Technology magazine lists new, up-and-coming vendors and also spotlights some companies that aren't necessarily new but haven't yet received coverage by this publication.

Profit-based pricing helps motor finance executives better understand their own customer demand, educate dealers about opportunities for growth, and make decisions within a strong compliance framework, as well as helping motor finance companies to be more proactive with regulators in support of compliance efforts, and the TCF initiative in particular.

"It's time for banks to open up about their price-optimization strategies," says Gartner (Stamford, Conn.) principal analyst Richard J. De Lotto. "Enough banks are doing it that it's not a competitive advantage to remain silent," he contends, suggesting that the industry could benefit from cooperating on price optimization.

The non-prime lending business offers an excellent opportunity for the use of innovative analytical tools to optimise prices. “The natural occurring variation in interest rates can be leveraged to develop models that predict the probability of a loan based on its risk and duration, with the probability of booking that loan to get an efficient frontier for making trade-offs between volume and profit,” Whittle explains.

One place to start down the path toward relationship pricing may be price optimization, but that could involve a whole new way of thinking. Instead of determining the price at which the bank is willing to sell a product, the goal is to figure out what the customer is willing to pay. Nomis Solutions Inc. of San Bruno, Calif., has developed a methodology that has helped some of its customers get 10 times their return on investment, said Dr. Robert Phillips, Nomis' founder, chief technology officer, and vice president of product management.

A few years ago I was approached about backing a company called Nomis Solutions. The idea behind Nomis was to apply modern price optimization techniques to the financial services sector. Was it a good idea? You bet.

Nomis Solutions, a leader in Profit-based Pricing for banking and finance, announced today the immediate availability of Nomis Price OptimizerT Suite 3.2.

Customers of Nomis Solutions can now access its Nomis Price Optimizer in a reliable, secure and high performance hosted environment, meaning Nomis' team manages the hosting, configuration, maintenance and administration of the profit-based pricing solution. The company also announced the availability of Nomis Price Optimizer Suite 3.2, which enables banks and finance companies to evolve towards more targeted customer-centric pricing.

Price optimization -- a term often used interchangeably with profit-based pricing -- is the method of finding the right price for a particular customer by channel, segment, geography, market or product. The key ingredient in price optimization that is absent in other pricing strategies is customer elasticity, the extent to which demand falls as price rises. According to experts, the current state of the economy and of technological advancement has made now the perfect time for price optimization, especially in the lending arena.

Nomis Solutions Inc. has raised an $8 million Series C from investors that are hoping Bob Phillips, one of the company's founders, can affect loan pricing at banks. The round was led by existing investor Bain Capital Ventures, which invested more than its pro rata share.

Nomis Solutions, Inc., a provider of profit-based pricing technology, offered the OCC insight into how its profit-based pricing technology removes subjectivity from the loan-origination process. Nomis's program uses algorithms to determine profit and volume levels based solely on adjusting prices, enabling lenders to decide where to set interest rates in order to meet certain profit or volume goals, said Robert Phillips, founder and chief technology officer of San Bruno, C.A.-based Nomis.

BenchMark Consulting International unveils results of pricing practices survey sponsored by Nomis Solutions that the majority of UPL pricing decisions are based on a limited number of predictive models. Most use a risk-based pricing approach adjusted for competitive rates. 34% consider reaching profit or volume targets to be their greatest challenge in 2007. 83% of participants have plans to improve pricing processes in the next year.

In order to compete effectively, motor finance executives need a good understanding of demand elasticity and how a change in price could impact key performance indicators such as profitability, volume, conversion rates, retention and default. This needs to be viewed along side a dynamically changing mix of manufacturer-led promotions for new cars and a plethora of lending options in the used car sector.

Rozelle says that by moving beyond old-school pricing strategies and adding a multi-dimensional view of what customers will do as prices are increased or decreased, a better view of the overall marketplace emerges. "You can start to focus on a particular component of the pricing matrix, so that a small move in a certain area may have a greater impact than a large move in another area."

"Before, the process was a little bit beyond throwing darts at a wall and trying to guess what the client wants," said Dan Rozelle, a vice president and the sales finance product manager at BB&T Corp. "It was a combination of science and art. "Using automated pricing software brings to the table a more formal process and a more scientific database for analyzing pricing," he said.

When applied effectively, price optimization can help banks improve customer profitability and retention, Khirallah contended. To do this, banks need to focus on customer needs rather than products, use advanced analytic software, view the results across teams of bank departments, and automate many of the processes associated with pricing, Khirallah said.

Our annual Mortgage Technology list of new vendors spotlights companies that aren't necessarily new but haven't yet received coverage by this publication. As we learn more about the actual business benefits enjoyed by lenders using the products and services of these promising companies, our future stories will share those results with our readers.

Phillips contends that there is no way to gain competitive advantages through cost- or risk-based pricing because the approaches are so widely used. Profit-based pricing, he said, is the next frontier because it enables lenders to consider dealer and customer price sensitivity when making a price recommendation.

As banks find margins becoming tighter as many services become more commoditized, getting to know where a customer's "breaking point" is in terms of pricing can be the difference between maximum profitability, or losing that customer to a competitor. "One of the challenges is there's not an understanding of elasticity of pricing," says Kathleen Khirallah, research director for retail Banking at TowerGroup, which has published a report on profit-based pricing penned by senior analyst Bobbie Britting.

BenchMark's survey identified the factors considered when making pricing decisions, and the growing appetite for a profit-based approach to pricing. Current pricing practices, such as anecdotal-based pricing, which focuses on rules of thumb or assumptions about the business; market-based pricing, which focuses on the competitive landscape; and risk-based pricing, which focuses on the cost of the product, are leaving money on the table because they are not focused on how much value customers place on the bank's home equity lending products, Benchmark said.

Nearly 75% of a sampling of financial institutions plan to improve their pricing of home equity loans within the next two years, according to a study released by BenchMark Consulting and Nomis Solutions.

Taken together, Profit-based Pricing technology and changes to the structure of dealer incentives can help solve the pricing problem in motor finance, reverse the decline in penetration and increase profitability.

This article is based on a chapter of the book Pricing and Revenue Optimization, by Robert Phillips. Dr. Phillips contends that profit-based pricing is relatively new to the financial services industry; after explaining its success in other industries, he provides 10 key elements of a successful profit-based loan-pricing model.