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Cross sell: The growing need to diversify
James Hickey and Penny Butler © Deloitte Actuaries & Consultants Limited
• “A new normal” • Cross sell offerings • Case study: Mortgage Brokers • Bank models • Pushing boundaries
Agenda
• e.g. Life Risk evolution
Traditional to new channels • Others product offerings:
• Group Life • General Insurance • Wealth Management • Estate Planning
IFA / Life Agent Financial Planners Bank Branch Alliances Direct Mortgage Brokers, Aggregators etc … ?
Why will banks focus on cross sell? System Size • Total market over $1.2tr at Dec 2011 • Monthly settlements c.$20b per month
System % Growth Rates • Growth rates slowing (now 5% p.a.) • New normal for medium term
What’s changed: Mortgage system growth fallen from 15-20% to <5% p.a.
• “A new normal” • Cross sell offerings • Case study: Mortgage Brokers • Bank models • Pushing boundaries
Agenda
Cross sell offerings Offering Potential Features Relative Margin
Wealth • Full advice offering
• Scaled advice offering
• Online/ low cost super fund
Life Risk • Loan protect
• Simple direct life risk
• Fully underwritten life risk
• Funeral Insurance
General Insurance • House and Contents packaged with loan
• Bundled other products
• “A new normal” • Cross sell offerings • Case study: Mortgage Brokers • Bank models • Pushing boundaries
Agenda
Case study: Mortgage brokers
Industry Issues: • Consolidation
• Commission reductions by lenders
• Slowing finance market
• Increased compliance
• NCCP is still being integrated in to broker processes
• Fee for service remuneration models are being considered, although in relative infancy.
AFG Mortgage Choice
Aussie Home loans
VOW financial
Smartline
Plan Choice Aggregation
FAST Connective FirstFolio
Market Insights: Broker landscape Will ‘fee for service’ occur for brokers? What cross sell areas are most likely to be successful for
mortgage brokers?
• A mortgage is likely the largest debt of a customer’s life, and they probably have little
understanding of the risk that they are actually taking on • Australians are grossly underinsured in life risk; mortgage debt levels are at an all time high • Under NCCP, brokers are spending more hours in front of clients and are increasingly well
placed to understand their needs • A variety of life risk products and models are available • Commissions- whilst smaller than those received for the loan- are perceived as fair for the
additional work required to cross- sell life risk insurance.
Speaking broadly, a broker with a conversion rate of 30% for life risk products might earn the same amount as writing additional 1-2 loans per month.
Life risk should be an easy cross sell..
.. But no one has it completely right
Non - referral
Referral
No advice
General advice
Full Advice
Poin
t of s
ale
“Tic
k an
d Fl
ick”
A number of different models exist in the broker market
Broker Requirements to cross sell
Motivation
Support
Trust
CONFIDENCE
• “A new normal” • Cross sell offerings • Case study: Mortgage Brokers • Bank models • Pushing boundaries
Agenda
• Those with bancassurance experience are making solid progress • Others are struggling - are they product providers or distributors? • How are traditional channels (IFAs, branches, direct) aligning with newer
channels (alliances, online, social media etc) at pre/at/post point of sale
A clear distribution strategy is key
Bank Models: Cross sell cross road
Empowering the branch Branch Requirement Lessons learnt
Education for staff • Required for product features and needs based conversation • Technical ability accounts for only 10% of sale • Role plays and conversation scripting are vital
Customer centric position • Customer needs first, product opportunity second
Support from head office • Initial and ongoing support required, including real time support • Campaigns to increase general customer awareness • Install cross sell targets, and monitor performance
Appropriate products • Products and processes should be relatively quick, simple and easy to explain, and integrated into BAU
Timeliness • Insurance should be brought up early in the loan conversation • Conversion rates decline dramatically with time after loan has
been approved
• “A new normal” • Cross sell offerings • Case study: Mortgage Brokers • Bank models • Pushing boundaries
Agenda
• Segmentation (life cycle vs behavioural) • Merging products • Bundling products • Existing and new customers
Pushing boundaries
The road may not be easy, but the rewards are there for banks that can get
this model right
General information only This presentation contains general information only, and none of Deloitte Touche
Tohmatsu Limited, its member firms, or their related entities (collectively the “Deloitte Network”) is, by means of this presentation , rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte
Network shall be responsible for any loss whatsoever sustained by any person who relies on this presentation.
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and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
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more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte's approximately 170,000 professionals
are committed to becoming the standard of excellence. About Deloitte Australia
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© 2012 Deloitte Actuaries & Consultants Limited.
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