The Hindu Business Line : Banks see rise in revenue from cross-selling retail products

SELLING multiple products is proving to be a win-win situation for both banks and customers. Leading banks say over 30 per cent of their retail business comes through cross-selling.

The advantages for banks are less cost in acquiring customers and building relationship with them. Customers can leverage this relationship to get personalised products.

For HDFC Bank, up to 30 per cent of retail income originates from internal customers, said Mr Paresh Sukhtankar, Head-Credit and Market Risk. The bank saw retail advances at Rs 11,696 crore in 2004-05.

The aim is to meet all financial requirements of the customer such as car loan, personal loan, loan against securities, debit and credit cards. Selling products such as mutual funds, insurance, RBI bonds and services such as payment of utility bills, also form part of the bank's retail activities.

"The more products we sell, the more we are strengthening our relationship with the customer," Mr Sukhtankar said.

Cross-selling has helped ICICI Bank acquire customers and build scale, said Mr V. Vaidyanathan, Country Head, Retail. "The efficiency of the bank is directly proportional to cross-selling," he said.

In the case of retail loans, cross-selling is advantageous because the track record of the customer is proven. The customer, in turn, enjoys the ease and convenience of less documentation.

For ICICI Bank, which had retail assets worth Rs 56,133 crore, in 2004-05, 30 per cent incremental volumes in retail came from cross-selling. It increased from 20 per cent in the previous year, Mr Vaidyanathan said.

Banks usually incur high marketing costs for products such as car loans and home loans.

"By cross-selling to our existing customers, the costs can be brought down. We can also offer competitive pricing and better deals to our customers," said Mr Sukhtankar.

Loans against insurance or linking deposit schemes to insurance, depending on customer needs, are some examples of personalised products, said Mr Paul Ingty, Deputy General Manager, Head of Marketing and Cross Selling, State Bank of India. SBI saw retail advances at Rs 46,451 crore for 2004-05.

Mr Ingty said, "As we have subsidiaries for products such as credit cards, mutual funds and life insurance, we decided to leverage our own customer network and this has worked well for us."

Around 50 per cent of the sales of SBI's subsidiaries such as SBI Mutual Fund, SBI Cards and SBI Life come through selling of these products through the over 7,000 `bouquet branches' of SBI.

The bank hopes to double the sales by cross-selling in the coming year, Mr Ingty said.

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