Cross-selling Financial Services: Profit through Retention

Introduction

The industry assumption that simply improving multiple product holdings will boost retention rates no longer holds. Changing needs of consumers as well as ongoing technological advancements mean that providers must reassess their cross-sell strategies in order to drive profit through a more holistic approach to retention.

Scope

*Using data from our global FSCI survey, this report evaluates the drivers of customer retention

*The report discusses trends and developments in consumer needs and providers' capabilities and how these can drive a successful strategy

*The report provides concrete actions for providers to create a holistic approach to customer engagement in order to boost retention levels

Highlights

In assessing the impact that multiple product holdings have on a consumers' likelihood to change their primary bank, Datamonitor has found that contrary to industry assumptions a direct and simplistic link between product holding and intention to stay with a bank cannot be made.

While it is understandable that those who believe that economic conditions have worsened are more likely to now shop around more for their FS products, it is those who believe that economic conditions in their country have actually improved who are the most likely to shop around more now.

Generations X and Y have grown up in an increasingly technological world and this has had many implications for the way they view the FS space, both in the commoditization of products, but also in their personal interaction and communication preferences.

Reasons to Purchase

*Access the results of Datamonitor's Global FS Consumer Insight survey in order to identify the drivers of customer retention

*Identify why cross-selling strategies must be reassessed as a result of changing consumer needs

*Identify strategies you can take to create a more holistic approach to customer engagement and effectively gain greater share of wallet


Report Highlights

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TABLE OF CONTENTS
Overview 1
Catalyst 1
Summary 1
Methodology 1
INTRODUCTION 7
Customer retention is vital for providers to boost profits 7
THE FUTURE DECODED 10
Trend: The perception that increasing consumers’ product holding boosts customer value does not hold 10
Insight: High product holdings do not automatically translate into greater customer retention 10
Insight: Without trust, cross-sell does little to increase retention 15
Insight: Switching behavior is naturally higher among some consumer groups 18
Trend: Economic conditions are making consumers more selective about where they buy their FS products 25
Insight: Primary bank loyalty is not necessary linked to consumers' more general perceptions of worsening economic conditions 30
Insight: Savings products represent the biggest cross-selling opportunity for primary banks 32
Trend: Technology has brought advantages and disadvantages to customer retention 37
Insight: Generations X and Y have grown up to see FS products as 'goods' rather than 'services' 40
ACTION POINTS 44
Action: Integrate CRM and Web 2.0 to create a holistic customer retention strategy 44
Action: Any customer retention strategy is worthless unless accompanied by a committed company culture 48
APPENDIX 50
Data tables 50
Methodology 62
Definitions 63
Further reading 65
Ask the analyst 65
Datamonitor consulting 65
Disclaimer 66


TABLE OF FIGURES
Figure 1: Consumers are unlikely to change their primary bank over the next six months 11
Figure 2: High product holdings cannot be assumed to increase customer retention 12
Figure 3: Customers with high product holding are likely to investigate products from other providers over the next six months 13
Figure 4: Customers with high product holding are more likely to research whether their money is safe where it is over the next six months 14
Figure 5: US and Australian consumers with high primary bank product holding were particularly more likely to switch 15
Figure 6: Trust plus high product holding is the holy grail for minimizing switching 16
Figure 7: Reassuring consumers that their money is key to rebuilding trust 17
Figure 8: The link between trust and product holding varies widely across different countries 18
Figure 9: Consumers in China, Spain and India are most likely to change their primary bank 19
Figure 10: Younger consumers are most likely to change their primary banks in the next six months 20
Figure 11: Customers with high product holding are financially intelligent 22
Figure 12: More financially intelligent consumers are more prone to switching 23
Figure 13: Customers with high product holding are read the paper far more often than those with low product holding 24
Figure 14: Consumers who believe that economic conditions in their country have remained the same over the last year are the least likely to shop around more 26
Figure 15: India holds the highest number of consumers who believe that economic conditions in their country have improved 27
Figure 16: The influence of economic conditions on the likelihood to change varies considerably across different countries 28
Figure 17: Likelihood to shop around more stems from concern in all product areas 30
Figure 18: There is little correlation between primary bank loyalty and perception of worsening economics 31
Figure 19: Savings products represent the biggest cross-selling opportunity for primary banks 33
Figure 20: Product popularity is similarly diverse in all European countries, but the US profile differs 34
Figure 21: Primary bank product popularity differs widely across Asia Pacific 35
Figure 22: Brazilians are more than average likely to hold every product with their primary bank, except mortgages 36
Figure 23: Younger consumers are less loyal 41
Figure 24: Younger consumers are less trusting 42
Figure 25: Providers must harness the advantages of a social and technological approach to consumers in equal measure 45
Figure 26: Bank of America’s Small Business Online Community successfully pioneered the use of Web 2.0 in a customer-driven engagement and cross-selling strategy 47


TABLE OF TABLES
Table 1: Likelihood of changing primary bank in the next six months segmented by country 50
Table 2: Likelihood of investigating the banking products and services available from other banks according to number of products held with primary bank 51
Table 3: Likelihood of researching whether money is safe where it is over the next six months according to number of products held with primary bank 51
Table 4: Likelihood of changing primary bank in the next six months according to product holding, segmented by country 52
Table 5: Extent to which consumers feel their bank has reassured them that their money is safe, and corresponding trust levels 52
Table 6: Trust in primary bank and average number if products held with primary bank segmented by country 53
Table 7: Likelihood of changing primary bank in the next six months, segmented by country 54
Table 8: Likelihood of changing primary bank in the next six months, by age segment 54
Table 9: Indicators of financial intelligence according to those with no, and those with five or more, other products held with the primary bank 55
Table 10: Frequency of reading newspapers according to number of products held with primary bank 55
Table 11: Likelihood of changing primary bank in the next six months, according to indicators of financial intelligence 56
Table 12: Change in economic conditions in your country over the last twelve months and likelihood to now shop around more 56
Table 13: Perceptions of the worsening in economic conditions over the last year, by country 57
Table 14: Likelihood of changing primary bank in the next six months, according to the change in economic conditions over the last year, segmented by country 58
Table 15: How current levels of concern in a number of product areas are affecting likeliness to now shop around more 59
Table 16: Percentage of consumers who believe economic conditions to have 'worsened a lot' in the last 12 months, and percentage of total products which are held with primary banks, by country 60
Table 17: Percentage of total products in each product area which are held with the primary bank 60
Table 18: Percentage of total products in each product area which are held with the primary bank, segmented by country 61
Table 19: Number of non-current account products held with primary bank, by age segment 62
Table 20: Trust in primary bank, by age segment 62



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TABLE OF TABLES
Table 1: Likelihood of changing primary bank in the next six months segmented by country 50
Table 2: Likelihood of investigating the banking products and services available from other banks according to number of products held with primary bank 51
Table 3: Likelihood of researching whether money is safe where it is over the next six months according to number of products held with primary bank 51
Table 4: Likelihood of changing primary bank in the next six months according to product holding, segmented by country 52
Table 5: Extent to which consumers feel their bank has reassured them that their money is safe, and corresponding trust levels 52
Table 6: Trust in primary bank and average number if products held with primary bank segmented by country 53
Table 7: Likelihood of changing primary bank in the next six months, segmented by country 54
Table 8: Likelihood of changing primary bank in the next six months, by age segment 54
Table 9: Indicators of financial intelligence according to those with no, and those with five or more, other products held with the primary bank 55
Table 10: Frequency of reading newspapers according to number of products held with primary bank 55
Table 11: Likelihood of changing primary bank in the next six months, according to indicators of financial intelligence 56
Table 12: Change in economic conditions in your country over the last twelve months and likelihood to now shop around more 56
Table 13: Perceptions of the worsening in economic conditions over the last year, by country 57
Table 14: Likelihood of changing primary bank in the next six months, according to the change in economic conditions over the last year, segmented by country 58
Table 15: How current levels of concern in a number of product areas are affecting likeliness to now shop around more 59
Table 16: Percentage of consumers who believe economic conditions to have 'worsened a lot' in the last 12 months, and percentage of total products which are held with primary banks, by country 60
Table 17: Percentage of total products in each product area which are held with the primary bank 60
Table 18: Percentage of total products in each product area which are held with the primary bank, segmented by country 61
Table 19: Number of non-current account products held with primary bank, by age segment 62
Table 20: Trust in primary bank, by age segment 62


TABLE OF FIGURES
Figure 1: Consumers are unlikely to change their primary bank over the next six months 11
Figure 2: High product holdings cannot be assumed to increase customer retention 12
Figure 3: Customers with high product holding are likely to investigate products from other providers over the next six months 13
Figure 4: Customers with high product holding are more likely to research whether their money is safe where it is over the next six months 14
Figure 5: US and Australian consumers with high primary bank product holding were particularly more likely to switch 15
Figure 6: Trust plus high product holding is the holy grail for minimizing switching 16
Figure 7: Reassuring consumers that their money is key to rebuilding trust 17
Figure 8: The link between trust and product holding varies widely across different countries 18
Figure 9: Consumers in China, Spain and India are most likely to change their primary bank 19
Figure 10: Younger consumers are most likely to change their primary banks in the next six months 20
Figure 11: Customers with high product holding are financially intelligent 22
Figure 12: More financially intelligent consumers are more prone to switching 23
Figure 13: Customers with high product holding are read the paper far more often than those with low product holding 24
Figure 14: Consumers who believe that economic conditions in their country have remained the same over the last year are the least likely to shop around more 26
Figure 15: India holds the highest number of consumers who believe that economic conditions in their country have improved 27
Figure 16: The influence of economic conditions on the likelihood to change varies considerably across different countries 28
Figure 17: Likelihood to shop around more stems from concern in all product areas 30
Figure 18: There is little correlation between primary bank loyalty and perception of worsening economics 31
Figure 19: Savings products represent the biggest cross-selling opportunity for primary banks 33
Figure 20: Product popularity is similarly diverse in all European countries, but the US profile differs 34
Figure 21: Primary bank product popularity differs widely across Asia Pacific 35
Figure 22: Brazilians are more than average likely to hold every product with their primary bank, except mortgages 36
Figure 23: Younger consumers are less loyal 41
Figure 24: Younger consumers are less trusting 42
Figure 25: Providers must harness the advantages of a social and technological approach to consumers in equal measure 45
Figure 26: Bank of America’s Small Business Online Community successfully pioneered the use of Web 2.0 in a customer-driven engagement and cross-selling strategy 47



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