Cross-selling, the retail key for banks

Next time you visit the neighbourhood State Bank of India (SBI) branch, do not be surprised to see the staff there in suits and ties flashing their visiting cards to attract business from walk-in customers.

The SBI top brass has given the employees a heavy mandate to fulfill "" at least 50 per cent of all new customers of housing loans, car loans and tractor loans should be covered by SBI Life's insurance products.

It is not just insurance that is being given a major push. The banking behemoth's management is also ensuring that adequate number of the branches sell the group's mutual fund products and credit cards to push the total income.

SBI is not alone. ICICI Bank, the country's second largest bank after SBI, is also working on a similar strategy "" to cross-sell products to its 10-million strong customer base. The bank today boasts of 50 per cent of its credit card sales coming from the bank's depositor base.

And 25 per cent of home loans from the existing customers. Says ICICI Bank deputy managing director, Kalpana Morparia, "We are aiming to sell 30-35 per cent of home loans in the coming year to our customers. Similarly, we hope to cross-sell credit cards to 60 per cent of the bank's customers." "With ICICI Bank's huge customer base, cross-selling has become a reality."

S Krishnamurthy, chief executive officer, SBI Life, said, "We have been able to cover 50 per cent of borrowers of fresh home loans. Since December, we have underwritten about 1,200 home loan proposals each month. Against SBI's expectation of disbursing two lakh home loans in fiscal 2005, we have targeted to cover one lakh of these borrowers."

"SBI can expect a fee-based income of about Rs 15 crore this fiscal, which will increase to Rs 50 crore in 2004-05 and to over Rs 300 crore in the coming years."

According to a recent market study, 87 per cent of Indian banks have made no attempt to cross-sell or up-sell related banking products during the course of customer interaction.

"Most of the time, even if customers are themselves enquiring about other bank products, 43 per cent of Indian banks have failed to respond to customers' inquiries," the report pointed out.

Another report "" titled Banking in Asia: acquiring a profit mindset "" by McKinsey & Co, a global consultancy firm, said, "Banks lack cross-selling capabilities at the branch level, partly as a result of lack of incentive and the fact that banking products have always been bought and not sold."

HDFC Bank, a relatively smaller one than SBI and ICICI Bank, is today seen as the third-largest cross-seller of mutual fund products.

The entire push towards cross-selling is to increase fee-based income and enhance retail disbursements.

Banking on it

• ICICI Bank aims at 35% home loans from bank customers
• The private sector bank targets 60% sale of credit cards to bank customers
• SBI targets 50% of retail loans to be insured
• HDFC Bank third largest cross-seller of MFs