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Savvy Cross-Selling Key to Success in Online Banking/Insurance Integration

Banks have begun dipping into insurance services. While these partnerships promise new distribution and branding opportunities, both banks and insurers exploring non-traditional distribution channels should beware.

by Tim Carpenter, Gomez, Inc.

Following their plunge into the online brokerage space, banks have begun dipping into insurance services. According to the most recent Gomez Online Banking Scorecard, almost 57 percent of the 30 ranked banks have integrated insurance services into their Web sites, eclipsing the number that offer brokerage accounts by nearly 7 percent.

While these partnerships promise new distribution and branding opportunities, both banks and insurers exploring non-traditional distribution channels should beware: The integration of insurance services alone is unlikely to spark widespread adoption. If banks want to see significant policy sales-and if insurers want to build market share through the banking channel-they will need to not only address sensitive implementation and user experience concerns, but also engage in extensive promotions and embark on innovative cross-selling initiatives.

Patelco Credit Union offers one example of how such a cross-selling strategy can work. The company has teamed with direct-to-consumer personal auto insurance provider, Esurance, and introduced an online auto loan and insurance application that attempts to lure prospects, precisely at the point where they're most likely to take the bait.

The application allows Patelco members to receive a loan and initiate insurance coverage online in a matter of minutes. When members enter their personal data into a loan application, Esurance's proprietary technology provides a preliminary quote based on the year, make and model of the specified car. For a more detailed quote, members can click over to the Esurance site, where they'll find the Esurance application pre-populated with the vehicle data. Once they accept the offer, customers can use their e-mail confirmation as the required proof of insurance when they return to the Patelco loan application.

Why is this initiative so attractive to applicants? For one thing, it eliminates legwork for people who are uninsured, need to renew coverage, or are interested in cheaper coverage. It also helps keep uninsured customers from abandoning the loan application upon discovering that they can't get a loan without proof of insurance. Further, it removes redundancies through the re-use of customer information, thereby augmenting the incentive to do business with a bank or credit union.

This is a smart move on the part of Patelco. Instead of marketing insurance online as a stand-alone product or through the use of unproven and clunky personalization engines, Patelco is combining two points of sale and focusing its auto insurance efforts on a complementary niche of online bankers. The initiative is likely to outperform other cross-selling techniques for the following reasons: It's a more attractive strategy. Cross-marketing entire product lines to diverse masses of customers under one somewhat diluted banner and integrating personalization engines have failed to spur customer adoption, largely because of disconnects between partners' IT and business strategies. The value proposition in the Patelco/Esurance initiative lies in the convenience afforded to customers through the bi-directional transfer of information between companies during each application, as well as verification agreements between companies, which speed up both sales processes.

It is logical. It makes more sense to assume that customers applying for car loans online would simultaneously apply for auto insurance than it does to believe that customers performing deposit account transactions online would similarly apply for insurance through their bank site.

It provides a well-timed nudge. Stand-alone marketing puts the onus on customers to realize that they need insurance and to purchase it from their primary bank. In contrast, a loan application integrated with automatic insurance quotes subtly escorts them to this conclusion.

The introduction of Patelco and Esurance's bundled insurance/loan application may be a precursor to a new breed of "standard practices" employed down the road by not just banks and credit unions but other financial institutions. Mortgage lenders, for example, may tie mortgage applications with homeowners or mortgage insurance requests. Ultimately, the bundling provides convenience for customers, and it is this expediency which will likely allow Patelco/Esurance's targeted, point-of-sale cross-sell to succeed where others have failed.

Tim Carpenter is an online banking and insurance analyst at Gomez, Inc., a Waltham, MA market research and consulting firm that specializes in Web site usability, utility and performance. Visit for more information.

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