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Editorial
Cross-selling to survive
A US retail bank, Norwest Bank, which has the highest cross-selling rates (roughly four products per customer compared to two for other banks), discovered a startling fact about the behaviour of its customers. It found that 90 per cent of its customers stay for at least two and a half years if they hold eight of its products. The percentage drops to 65 per cent if they hold two or less.The Norwest theorem could have heavy implications on the emerging retail banking scenario in India. As more players enter the market and disintermediation gets brisk, the most important concern on any banker’s mind would be retaining clients. That would require a degree of performance beyond that of a traditional bank. Vending third party mutual funds and bill payments and insurance (post deregulation) could be services on offer by banks. Banks which fail to recognise this are in for hard times ahead. As the saying goes, resisting change is the fastest way to extinction.
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