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Cross Selling in Retail Banking: Meeting the Revenue Growth Challenge

By: Steven I Davis
Published: December 2006

Cross Selling in Retail BankingIn a market of increased competition with an ever-diminishing customer base, selling more to your existing customers makes perfect business sense. The current industry average is 2.69 products held per customer - how does your bank shape up?




To purchase this report, or to request a report summary or list of case studies, call Jeannie on +44 (0) 207 563 5640 or email

An informed and candid assessment of the challenges and opportunities inherent in cross-selling as a driver of revenue growth.

Get the answers to these key questions:

  • What are the cross-sell strategies that currently work best?
  • Which critical success factors are at the core of best-in-class cross-sell strategies?
  • How do you avoid, or minimise channel conflict?
  • What's the best approach to motivating and rewarding sales staff?
  • What lessons can usefully be learned from other banks recent experiences?
  • Why are some commercial banks so much better at cross-selling than others?

Who should read this report?

Heads of retail banking and marketing managers who want to understand industry best practice and the lessons they can derive for their own business, from others recent experiences  both good and bad - so they can make a realistic assessment of their own prospects for cross-selling success.

Management Consultants who need to know what lessons from others experiences they can take to their own banking sector clientele, who want a source of comparative data they can use in their own work and who want to ensure they are up-to-speed with industry best practice.

Banking Sector Equity Analysts who need hard data and rigourous analysis that they can use to arrive at a more realistic assessment of real, ongoing growth in earnings per share, be it across the banking sector as a whole or for individual banking stocks.

Business School Academics and MBA students who are looking for a reliable source of information on current banking sector practice in the area of cross-selling, including hard data.

Plus anyone else in retail banking and financial services who wants to know more about the opportunities, challenges and possible pitfalls of cross-selling as a core strategy for growth.


To purchase this report, or to request a report summary or list of case studies, call Jeannie on +44 (0) 207 563 5640 or email

Cross-selling in retail banking – the marketing of additional products and services to the existing customer base – has become a strategic priority for commercial banks across the developed world.  As other sources of organic growth such as loan demand, have slowed, and adding new clients becomes more expensive in increasingly competitive markets. Investors have focused on the metric of cross-selling as one of the key performance benchmarks.

To evaluate the results of these efforts and identify strategies which may be relevant for the future, our methodology in this report first examines studies by independent researchers and consultants, as well as material in the trade press.  We then undertook in early 2006, a series of in-depth interviews with about 20 leading retail banks in the US and Europe, as well as specialist consultants and other experts in the retail banking sector.  From this material, we identified 10 case studies of successful cross-selling employing a variety of strategies.  The report concludes with our own findings and conclusions from this research and our view of future trends in cross-selling.

More specifically, after the introduction in Chapter 1, chapters 2 and 3 analyse the key dimensions of product and client. Chapter 4 discusses the major cross-selling models used.  In Chapter 5, we review the findings of four major pieces of independent research in the US and European markets.  Chapter 6 summarises the barriers to success in cross-selling based on our desk research and interview series.  Our own analysis begins with the 10 case studies in Chapter 7, where we review different approaches to cross-selling success and evaluate their likely future evolution.  Chapter 8 provides our findings and conclusions, with the final Chapter 9 suggesting possible future trends.

Of central importance in this report, is the analysis in Chapter 5 of several major independent studies of cross-selling, each of which takes a different approach to the subject.  In its comprehensive review of the commitment of over 30,000 retail clients of some 100 banks in 12 European countries, a study by Citigroup (Schroder Salomon Smith Barney) in 2002 finds that banks in Scandinavia, France and Belgium score higher in number of products cross sold than those in the UK and Germany.  Yet there is no exact correlation between customer commitment and cross-selling success, as other factors, such as competitive providers and proximity to the client, also play a role.  In 2005, the consulting firm AT Kearney examined the US financial institution sector in terms of so –called ‘wallet momentum’ – the willingness of clients of 31 major banks and other financial institutions to buy additional products from their leading provider.  The scores of major banks ranked below such providers as stockbrokers, smaller banks and specialists such as American Express, and there appeared to be little interest in buying additional products from the lead provider.

Another approach was undertaken by the investment bank JP Morgan, which undertook to estimate the product profitability by European country in an effort to evaluate the attractiveness of cross-selling.  They found wide differences in such core products as the current account and mortgage loans, which call into question the widespread assumption that incremental product sales per se increase overall profits.  Finally, a telephone interview series conducted by the consulting firm Celent of 20 European banks, provided the banks’ own estimates of their cross-selling performance.  These estimates roughly corresponded to the ranking established by the Citigroup study.

These findings, combined with those from our case study and interview analysis, are provided in Chapter 8 of the report and can be summarised as follows:

- the fragmentary and contradictory data base on cross-selling results invalidates, in our view, any significant inter-bank and inter-country conclusions.  The cost of producing more reliable data would appear to limit the value of cross-selling research to time series for an individual institution.

- several studies question the interest of banking customers in buying additional products from an existing bank.  There would appear to be significant proliferation of the number of accounts per client as new product purchases are made from the institution offering them rather than a core account relationship.  Banks may make more money from clients buying multiple products, but that does not imply customer preference for a core relationship.

- price competition, usually under the guise of product packages offering a price discount, is becoming widespread in many developed markets for traditional banking products.  A growing number of banks reward customer loyalty with price differentials.

- long term investment and savings products such as life insurance and guaranteed capital products not only provide higher margins but also are more ‘sticky’ in retaining the client relationship.  As price competition spreads to more traditional commercial banking products, the profit contribution of these long term savings products becomes more significant.

- many banks are making strenuous efforts to establish a culture of disciplined sales processes in order to improve cross-selling results.  By thus setting rigourous sales targets, however, they increase the possibility of mis-selling and conflict with customer satisfaction ratings.

- smaller or decentralised community-oriented banks are much better positioned to provide superior customer service than large, more complex institutions, which focus on volume of transactions rather than building customer relationships.

- CRM – customer relationship management – is a necessary element of the cross-selling equation, but its merits have been exaggerated.  Many systems are too complex to be used by client-facing staff, and they only provide the sales lead, whereas for many banks the problem is to persuade the bank staff to make use of that lead and build the relationship

- channel conflict – the lack of seamless interface between delivery channels – remains a problem for many large and complex banks.  In some cases the technical interface is not effective, and in others there is conflict over which channel should handle a relationship or transaction.

- co-branding or joint ventures in cross-selling – essentially leveraging the customer base of a partner 

- have produced limited results for commercial banks.  Monoline credit card companies have been successful in exploiting their partners’ client base, but in the arena of supermarket banking there have been few major successes of banks winning substantial market share through sales to a retailer’s client base.

- successful segmentation of the client base has taken many forms, with affinity groupings among the most successful.  Such success usually requires the discipline to focus on a limited number of priority groupings.

- the process of cross-selling is a complex one involving a number of variables such as the nature of the market, a bank’s own profile, and relative profitability.  But underpinning all these success stories is discipline in actually executing a cross-selling strategy.

- most cross-selling strategies are based on a limited number – perhaps only two – key products which reflect a bank’s core strengths as well as relative profitability and the competitive environment.  Such products often include the current account, which is usually the basis for the overall relationship, and the mortgage product or other form of consumer lending.

- the SME, or small business segment, has become an increasing focus for many banks in view of its overall profitability, the stickiness of the relationship, and the number of different products which can be sold.

- we found no ideal approach to the issue of incentive compensation in the cross-selling model. Much depends on the bank’s culture and the use of the metrics in a balanced score card.

- cross-selling success may vary widely across a bank’s retail network, and management’s challenge is to reinforce ‘best practice’ by ranking these units and, if necessary, changing the people involved in the process.

- we sense that an increasing number of banks are making successful use of customer satisfaction measures in their efforts to improve cross-selling and reduce customer attrition.  Such externally-derived measures are increasingly used to evaluate performance at branch or individual salesperson level.

Our vision of the future for cross-selling incorporates a number of these findings and conclusions:

As price and other competitive forces continue to depress retail banking profits, cross-selling will become both more difficult and, for the winners, more rewarding.  There is no one single winning cross-sell strategy, but four possible ‘roads to Rome’ will be particularly successful if well executed: a disciplined sales culture, success in marketing long term investment and other higher value products, disciplined focus on a limited number of attractive client segments, and truly superior customer service.

The Internet will play an increasingly important role in the cross-selling process as more clients prefer to access their relationship managers through direct contact.  Banks will become increasingly selective in their priority client and product focus, with an emphasis on high value in each dimension.  Success in selling long term investment products against the competition of independent brokers will be a key achievement of banks in markets like the UK and US.

But overall progress in cross-selling will probably be disappointing, especially given the expectations aroused by bank managements in their analyst presentations.  As pointed out in this report, cross-selling in the developed banking systems is a zero sum game in a well saturated market, and there is little evidence from our research that customers actually want to buy more from existing providers.  Thus the recent fragmentation of banking relationships is likely to continue.  The issue of mis-selling, which has been present primarily in the US and UK, could well spread to other markets.  And as banking consolidation continues, it will become increasingly difficult to offer the customer service and disciplined focus which are the keystones to so many successful strategies.

1. Introduction

2. Products

3. Clients

4. Alternative cross-selling models

5. The findings of independent cross-selling research

6. Barriers to successful cross-selling

7. Case studies

8. Research findings and conclusions

9. Outlook for the future

Appendix 1. List of interviews

Appendix 2. Bibliography

View full Summary Report

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