Fixing the pricing gap in banking relationships

Are you getting the relationship with your banking customers that you priced for? Many banking leaders might assume they are. They close the deal and move on, only to realize later that key parts of the relationship never materialize. Treasury management, deposits, or fee income may have been part of the plan, but without real visibility into a client’s entire banking relationship, the gap between the initial plan and the outcome often goes unnoticed.

For example, a banker might price a deal expecting a $5 million owner-occupied real estate loan, a $2 million line of credit that would be drawn half the time, $1 million in deposits, and $200,000  worth of treasury management fees. But after closing, all they have is the real estate loan and an undrawn line of credit union. The deposits in the Demand Deposit Account (DDA) are minimal, and the treasury management services never showed up. This sometimes happens when a client has plans to move their operating account but doesn’t if they feel the transition is burdensome.

At other times, a bank might offer a 7% rate then realize months later it should’ve been 8%. Still, the organization hesitates to reprice out of fear of losing the transaction.

In both cases, these misalignments can directly impact the bank’s net-interest margin and long-term profitability. Without a process to revisit pricing after the fact, mispriced business remains on the books and the longer it goes unchecked, the harder to fix.

Pricing should be a process

To prevent these scenarios, banks must shift their mindset and treat pricing as a continuous, relationship-focused process—not a one-time event. Developing a relationship-based pricing model means looking beyond individual transactions and considering the full client relationship over time. This requires a defined, intelligent, and empowered approach that incorporates risk ratings, market intelligence, and specific tactics to support balance sheet objectives.

Pricing should span the entire client lifecycle—from client acquisition through onboarding, expansion, relationship management, and renewal. It requires discipline: tracking which clients are delivering what they promised, reviewing pricing regularly, and coaching bankers to close gaps. Comparing approved pricing models to the client’s actual relationship months later holds bankers accountable and improves performance. Systems that spot discrepancies early allow bankers to correct pricing and behavior before they become bigger problems.

Reevaluating incentive plans

Implementing this ongoing pricing process also requires banks to rethink how performance is measured and rewarded. A major challenge is that most incentive plans still focus on loan volume and production instead of the quality or profitability of the relationship. For incentive plans to be effective, banks must align pricing processes with clear, strategic goals that prioritize long-term value over simply closing deals. This includes rewarding bankers not just for getting the deal done, but for securing the full, profitable relationship they priced for.

Putting this into practice means building in measurement, inspection, and coaching. With clean data, it will be easier for executives and managers to track performance at both the organizational and branch levels. Having an accurate view of performance creates a feedback loop where pricing informs behavior, behavior impacts performance, and performance shapes future pricing.

A smarter approach to pricing

Shifting pricing from a one-time event to a continuous process doesn’t have to be complicated. Banks can start small—review a few key relationships, compare expectations to outcomes, and use that insight to coach bankers and close gaps. Technology providers can also simplify this by surfacing discrepancies, supporting regular pricing reviews, and giving managers the visibility they need to hold teams accountable.

Ultimately, pricing isn’t just about getting the deal done; it’s about building profitable, lasting relationships. Banks that view pricing as a process not only improve their margins on individual deals but strengthen their competitive position and deliver greater value to shareholders over time.

Mac Thompson is CEO and founder of White Clay.