Foreign banks get up, close and personal

Not all banks' direct selling agents (DSAs) are making blind calls when it comes to cross-selling products.

Many foreign and private sector banks are targeting customers based on their lifestyle, age, profession, place of work and the type of transactions undertaken.

This means banks like Standard Chartered will not send a frequent flyer offer to a customer who rarely flies or has never flown.

Similarly, some banks will not send direct mailers on home loan products to those under 30 years.

"According to our internal study, we do not expect response for a mortgage loan from the age group between 25 to 35 years. Our customers who do respond to calls made by DSAs are those over 35 years of age," said Standard Chartered Bank head of business intelligence unit Sedjwick John Joseph.

Standard Chartered Bank and Citibank have gone for transanctional segmentation when it comes to cross-selling their wares.

In the process, banks are outsourcing their non-core banking activities to business intelligence entities such as SAS, whereby banks can focus on their core competence and gain business through upsell and cross-selling.

The whole idea is to understand the profitability of the customer and cross sell only those products he is likely to purchase. This leads to a two-fold benefit whereby banks' revenue increases as the response rate improves by a minimal of 25-30 per cent, said Joseph.

"When we know our target group, we can be certain of nearly 100 per cent response from direct selling. This also helps in cutting down on costs. The average savings could be as much as 15-20 per cent," he added. For the customer, it eliminates the excess junk mail.

SAS India leads the Business Intelligence Market in the country with a market share of 22.5 per cent, according to Frost & Sullivan Report, Business Intelligence in India, 2001-2008. SAS' key local customers include Standard Chartered Bank, Citibank, and HDFC Bank.

"Our bank clients send us the data and we undertake queries, which will help them cross-sell and up-sell to their customer base. This is possible through grouping customers based on demographics and profitability," said Geert Massa, director (financial services) SAS International.

Banks today no longer wish to take care the marketing, and are thus outsourcing their non-core banking activities and gaining business through upsell and cross-selling, said Massa.

"There is no question of parting with any secretive information. Segmenting customers into groups, we identify the different products they usually buy and try to cross-sell these products to those in the same group who have not purchased the same," he added.

Banks thus segment new customers and this helps increase returns, said a senior official of one of the largest foreign banks.

At the same time, when a customer is leaving the bank, it is possible to identify the group he belongs to and ensure that other customers are not at risk of leaving, said Massa.