The Challenge: Transfer Pricing Solutions for E-Banking

By: Irina Diakonova and Steef Huibregtse.

One of the major challenges the financial institutions face today, is the conversion of their current business models to a business model embracing all features the technology offers us. The technology revolution allows companies to run a more cost-efficient business, eliminate intermediaries, follow a multi-channel approach and reach their final destiny by implementing a fully – with their business – integrated client relationship management system.

Given the – almost sudden – shift to a customer-centric business model, the banks are (re)aligning their value propositions towards the market in many different ways. As result, the contributions, together with roles and responsibilities, of each of the business or division units within a bank are changing, expecting the compensation model – relevant to both financial and managerial accounts – to change as well.

The focus of this article is the changes in the transfer pricing system caused by a radical change of a business model. After describing the typical e-business models, we shall review the OECD guidance, provide practical examples and conclude with the impact of the new challenges on the transfer pricing system of the banks.

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