What is Cross Selling?

Cross selling means offering new products and services to the existing customers. In Banking cross selling is to offer new banking services to the existing customers of the bank. The purpose of the cross selling is twofold. One is to expand banking operations and another is to reduce the cost of operations. For example: a bank sells a loan product such as a credit card, home loan, personal loan etc. to a deposit customer or vice versa.
The cost of adding up a new customer to a bank is more than serving the existing customer with new products and this reduces the per person cost of running for a bank. However, please not its transaction that matters in cross selling. The value building, relationship building and winning a customer loyalty for bank does matter more when it promotes cross selling.
Its worth mention that in 2004, RBI had issued its guidelines to banks in context with the cross selling. The RBI said that banks should not share customer data with its affiliates and subsidiaries for cross-selling purposes.
RBI had constituted a committee on “Procedures and Performances Audit on Public Services” which was headed by S.S. Tarapore. The committee observed that the information collected from the customer is being used for cross-selling of services of various products by banks, their subsidiaries and affiliates.
The banks collect a database of the confidential and personal information about the customers to fulfill the Know Your customer requirements as directed by the RBI. This information was used by banks for retailing loan instruments such as aggressively selling credit cards and mortgage loans to the customers.
In this context RBI said that “ while this information which is collected as per KYC norms when a customer’s opens an account, using the same information for cross selling purpose is a breach of customer confidentiality obligations.

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