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What Is Bank Cross-Selling?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 02 November 2016
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Bank cross-selling is a strategy that allows the institution to offer a wider range of banking services and products to its clientele. The general idea is that if a customer comes to the bank for one service, the ability to also meet other needs at some future point is established thanks to that pre-existing relationship. When bank cross-selling is at its best, the bank has to exert less effort to sell those additional services, thanks to the established relationship with existing customers. Clients benefit because they can get what they need from a partner they already know and trust.

One of the most typical examples of bank cross-selling involves the decision by a client with a checking or savings account choosing to approach the bank for another financial service that is desirable. For example, rather than using dealer financing to buy a new car, the client may approach the bank about arranging a car loan. Under the best of circumstances, the bank is able to accommodate the customer and offers a rate of interest that is superior to that of the dealer financing. The client benefits from securing the financing at a lower personal cost while the bank benefits by the additional business from that client.

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Other financial services may also be obtained as the result of bank cross-selling efforts. Clients may seek the bank’s help in establishing savings accounts for children, establishing trust accounts, or even securing a credit card offered through the auspices of the bank. Ancillary services such as electronic funds transfers, letters of credit, and a range of other options are also often extended to customers who already have a relationship with the bank. In each scenario, the basis for the activity is the positive relationship that already exists between the client and the bank, and the willingness of both parties to broaden the scope of that relationship.

Bank cross-selling must be conducted in accordance with any trade and sales regulations that apply to the jurisdiction in which the bank resides. Complying with those regulations is to the benefit of both the client and the bank, since the rights and responsibilities of each party are clearly defined and the best interests of both parties are protected by those regulations. In practical terms, this means that banks cannot use sales tactics to motivate consumers into using services that are not a good fit for their current financial circumstances, and banks are not obligated to extend certain services to customers who present an unacceptable amount of risk.

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