In the last two decades, the banking industry has focused on creating shareholder value in two ways: acquiring new customers and optimizing the ‘supply side’ of business. Both have had some unintended consequences. Acquiring new customers is a very costly endeavor when they are lost almost as fast as they are gained. And the waves of channel optimization (call centers and Web sites intended to dramatically improve efficiency) have instead resulted in an overall increase in channel costs. Coupled with this, the need to maintain and deepen penetration of their customer base has long been recognized as vital by retail banks. Too many banks, however, have invested in supposedly ‘customer-centric’ strategies without reorienting their business model around the consumer. They have translated ‘customer-centric’ to mean cross-selling.
