If there is one banking strategy above
all others that has become the focus du jour it is
cross-selling. Indeed, in the toughening global banking
environment, interest in cross-selling has been driven to an
all-time high. Squeezing extra revenue from existing customers as
opposed to acquiring new ones continues to make very sound business
sense.

Spain’s Bankinter, which has long
championed a multi-channel, service-driven strategy, tops the
RBI list for cross-sellers in 2008, followed by Wells
Fargo.

There are some caveats: very few banks publish
cross-selling ratios, making comparison difficult; and
cross-selling is notoriously hard to quantify. Many banks rate
products per household over per customer (like Wells Fargo), while
some add peripheral products other banks ignore (such as free
insurance).

Still, looking at 20 global banks that
published a cross-selling ratio in 2008, the overall average is
3.69 products per customer. How does your bank compare?

Bankinter: it’s about customer
service

Wells Fargo: product per householdIgnacio Lozano, director of individual clients at
Madrid-based Bankinter, told RBI that his bank’s strategy
is not to over-sell to its customer base; the high cross-sell ratio
is borne about from a strong customer service ethos supported by an
integrated multi-channel distribution platform across branches,
online and, increasingly, mobile phones.

“It is about quality of relationships above
everything else and the quality of service,” Lozano said. “We have
invested heavily in our customer relationship management technology
[which has give the bank] an ability to pro-actively deal with
customer needs.”

He cited an example: the ability to offer
eligible customers preferential loans for purchases they would have
made on credit cards. “This has proved very popular,” he said.

Lozano added that cross-selling of insurance
products, including travel, has also been highly successful. With
an eye, perhaps, on further insurance revenue, Bankinter has just
announced that it is acquiring the 50 percent of local Spanish
insurance company Linea Directa that it did not already own from
Royal Bank of Scotland for €426 million ($560 million).

And Lozano stressed that branches are vital to
establish the initial customer contact – though this can be
successfully transferred online. “If you want to establish a
relationship you need a branch,” he stated.

Standard Chartered: bottom of the
league

By its own admission Standard
Chartered is bottom of the league. In his 2008 earnings review in
March, the bank’s chief executive, Peter Sands, said Standard
Chartered’s cross-sell ratio for 2008 was 1.4 products per customer
(see RBI 608).

“We want to increase that,” Sands outlined.
“So we are tailoring products for the needs of specific customer
segments and focusing on pricing based on our entire relationships
with customers, rather than simply on sales, and on how we manage
those relationships.”

For many banks, the rise of packaged or
bundled accounts has fuelled higher cross-sell figures. Wells
Fargo, for instance, which for the past decade or so has put
cross-selling at the centre of its entire retail banking plans,
reports that sales of its Wells Fargo Packages accounts – a
checking account and at least three other products – continue to be
strong.

In its first quarter 2009 report, the bank
said that sales of Wells Fargo Packages were up 31 percent
year-on-year, and were purchased by 76 percent of new checking
account customers.

The Californian group added it now had a
“record” retail bank household cross-sell of 5.81 products per
household (this does not include Wachovia customers). Some 24
percent of its retail bank households had 8 or more products.

Talking about his bank’s strong first quarter
results (see Indicators for the global economy), Howard
Atkins, Wells Fargo’s chief financial officer, said: “Wells Fargo
has had double-digit revenue growth in eight of the past 12
quarters. Our diversified portfolio of businesses and cross-selling
prowess allow us to satisfy our customers’ financial needs
throughout these cycles.”

Distribution

Cross-selling ratios – 20 selected
banks, 2008

 

Country/region

Average number of products per
customer(1)

Bankinter

Spain

6.34

Wells Fargo

US

5.81

Komercní banka

Czech Republic

5.7

Bradesco

Brazil

4.7

BBVA(2)

Spain

4.7

Swedbank(2)

Sweden

4.5

Millennium BCP

Portugal

4.06

Royal Bank of Canada

Canada

4

BBVA Bancomer

Mexico

3.6

KBC(2)

Belgium

3.6

UniCredit

Italy

3.4

Hana Financial

South Korea

3.4

Garanti(2)

Turkey

3.34

Türk Ekonomi Bankası

Turkey

3.33

Allied Irish Banks(2)

Ireland

2.7

Nordea(2)

Scandinavia

2.66

Commerzbank(2)

Germany

2.2

Deutsche Postbank

Germany

2.15

BMO Bank of Montreal

Canada

2.14

Standard Chartered

pan-Asia

1.4

Average

 

3.69

(1) often also referred to as products per
household;
(2) ratios from H1 2008 not full-year
Source: RBI