There are only three ways a bank or credit union can grow. They can expand customers’ and members’ use of products and services, attract new consumers from competitors, or buy another institution. “If you can’t do the first,” as a past CEO of a large-nationwide bank famously said, “what makes you think you can earn more business from your competitors’ customers or from customers you buy through acquisition?”
Ironically for its importance, “cross-selling” has a checkered past in banking. When pursued by institutions in the wrong way, it has often done more damage than good. For many consumers, it elicits memories of retail banking staff – compelled by quotas to hound those unfortunate enough to need branch services – pushing consumers to open another savings account or about a personal loan. Not too long ago, the term “cross-sell” was even tied to one of banking’s biggest, account-opening scandals.
Culturally, bank and credit union leaders avoid “selling.” Banking is a relationship business that’s about listening to consumers’ needs. The common challenge, though, is the practicality of listening. Who is going to ask the question? If it is banking staff, how is that different from consumers’ poor experiences of the past? How can institutions avoid a catch-22 in wanting to ask about consumers’ needs while avoiding conversations that feel loaded?
The key is to intuit consumer needs – often knowing what they want before they do – through their financial data.
A good example for 2022 is the record-setting equity of U.S. homeowners, who now have access to an average of $178,000 in tappable equity. With so many homeowners still working, schooling, and exercising at home, home equity is a timely tool for customers and members wanting to upgrade the place in which they spend so much time. Others have just purchased a house and want to invest in upgrades – like new paint, a better dishwasher, or a couch that fits the living room – to make the house feel like home. Still, others may simply want to buy that new car or build that deck they’ve always wanted. These kinds of consumers are likely candidates for a home equity line of credit (HELOC).
How can a banking organization find those homeowners who both have equity and want to use it to finance home improvements or large purchases? And how can technology enable successful cross-sell for home equity financing when other similar initiatives have struggled?