Is the Cross-Selling Real After a Bank-Brokerage Merger?

• Position: Brief Article

Banks sometimes merge with brokerages in an effort to enhance cross-selling opportunities. But, after some mergers, banks have discovered that it is trickier to access brokerage customers than they had originally anticipated.

One reason for this--cultural differences notwithstanding--is that banks are fundamentally different in their approach to product creation and distribution, says Geraldine D. Leder, a consultant to financial services companies. "Supermarket delivery"--the way banks identify market segments and create a vast array of products to distribute through those segments--is the polar opposite of matching products with needs one client at a time to meet brokerage suitability standards. "That's the crux of the cross-setting challenge," says Leder, who is president of LederMark Communications, a Baltimore-base marketing strategy and communications consultant

Moreover, brokers often own their accounts in a way without parallel in banks. Since brokers develop their own clients and often keep them for life, it follows brokers are skeptical gatekeepers for any product introduction. They are fearful of putting at-risk their advisory stature with clients for the sake of proprietary product-pushing. "The key to cross-selling bank products through brokers ties in honoring broker-client relationships and providing the quality and type of products, service, compensation, and other components brokers require of those who want client says Leder, who is former director and manager of the Corporate & Executive Services Group at Deutsche Banc Alex. Brown.

She offers suggestions on ways that banks can facilitate better cross-selling opportunities through brokers.

Approach it with a senior-level commitment. Executive management sets the tone for establishing a cross-selling culture. Developing a cross-selling infrastructure requires a re-engineering of sales delivery.

Centralize relationship management. Clients often deal with a firm because of their relationship manager. Clients may want all contact centralized through that manager. One approach: Separate the broker-based sales process from bank-based service delivery.

Give proper training. Brokers will be comfortable selling some bank products and referring other inquiries to the bank-product specialist...