A comparative study of cross-selling practices in public and private sector banks in India
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Richa Sharma Vyas* is a third year research scholar of Fellow Program in Management at the Management Development Institute, Gurgaon, India. Her research interests include consumer behavior, marketing of financial services and communication strategy. She has worked as a creative consultant for McCann Erickson advertising agency and as an academic associate at the Indian Institute of Management, Indore.
Nijaguna Rudrayya Bhusnur Math is a Professor of Finance at the Management Development Institute, Gurgaon, India. He has more than twenty years of work experience in Indian Financial Services Industry. He has worked in the State Bank India group, the biggest commercial banking group in India, Reserve Bank of India , the central bank and monetary authority of India and in The Discount & Finance House of India, the first and largest ‘Primary Securities Dealer’ of India. His research interests include management of banks and financial institutions, treasury operations, debt markets and financial risk management.
Abstract This paper is a study of cross-selling practices in Indian public and private sector banks through the case study method. The study revealed that cross-selling practices in public sector and private sector banks are quite different. These differences emerge mainly from their different philosophy, background and distinct target customer segments. However, both sectors can learn from each other; public sector banks can introduce specialised training and incentives, whereas private sector banks need to introduce appropriate control mechanisms and avoid indiscriminate cross-selling. The paper also brings out the elements of successful cross-selling in India. Journal of Financial Services Marketing (2006) 10, 123–134. doi:10.1057/palgrave.fsm.4760027 Keywords Cross-selling, customer retention, banking, customer relationship
INTRODUCTION The banking sector in India has witnessed a significant transformation in the past few years.1 Extensive deregulation, dilution of government ownership in Public Sector Banks (PSBs) and opening up of the banking sector to new private sector banks, as well as foreign banks, has brought in keen competition. Unlike in the past, banks in India now face the same challenges as any other business enterprise; they have to compete and have to ensure maximisation of share*Correspondence: Management Development Institute, Gurgaon, Mehrauli Road, Gurgaon 122001, India Tel: + 91 124 5013050; Fax: + 91 124 2341189; e-mail: [email protected], [email protected]
© 2006 Palgrave Macmillan Ltd 1363-0539 $30.00
Vol. 10, 4 123–134
holders’ wealth. In such a scenario, it is but natural that marketing assumes critical importance. The focus of marketing within the financial sector has shifted to managing relationships with customers.2 As cross-selling in banks is a relatively new phenomenon in India, it is felt that a study of how it is practiced in different banks in India, the problems faced in cross-selling and the various initiatives taken by banks would be useful. The paper is org
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