An Increased Share-of-Wallet Strategy for Banks

Palesa Lebona | June 10, 2021 | Tags

Main-banked customers are customers that have their main banking products with one bank. These customers are likely to “shop” in the same place and this eliminate competition. Their likelihood of attrition is also very low.

Banks can increase their number of main-banked customers by increasing their share-of-wallet through up-selling and cross-selling campaigns.

Before

ABC Bank offers any other product to any customer who opens an account with them. There is no strategy for marketing products to existing customers and no strategy to up-sell premium products to those who can afford.

After

ABC Bank now makes data driven decisions in marketing the next best product to its customers. Marketing campaigns are more targeted to customers with a high likelihood to take-up products.

Approach

Up-selling refers to encouraging customers to purchase higher-end of the same product in which they wish to purchase, e.g. A wealth customer applies for a credit card with a R 100k limit when they qualify for a R350k limit. Customer can be encouraged take-up a R350k limit.

Cross-selling refers to marketing products which are usually bought together with the products they purchase. There are a number of modeling techniques used to determine association.

Model Results

It is determined that customers who take-up a credit card with ABC Bank, 43% of these customers go on to get personal loans, 37% get vehicle finance and 20% get a mortgage loan. Those with a credit card and personal loan go on to get vehicle finance and a home loan.

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Results

Decreased competition Increased customer retention
Bank will have more information on customer spending behaviors Increased efficiency of bank’s predictive models

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