After Acquisition Binge, Norwest Sees Marketing As the Way to Grow

1995 was the year Norwest Mortgage broke into the most exclusive club in mortgage banking, becoming one of just four companies with a servicing portfolio topping $100 billion.

Acquisitions have fueled most of the Des Moines company's growth, helping it to more than double its servicing assets in two years.

The Norwest Corp. unit plans to continue expanding this year. But now it expects much of the growth to come from its own marketing efforts.

Norwest Corp.'s chairman, Richard M. Kovacevich, contends that banks can grow most efficiently by mining their customer bases for sales opportunities.

"The most effective way to gain revenue and profits is to cross-sell to customers," he said.

Norwest's focus on internal growth is likely to spread this year. Big banking companies that bought mortgage businesses in the merger and acquisition frenzy of the past two years are finishing the job of absorbing these operations. The next step is to deliver on the cross-marketing potential.

For Norwest Corp., that means offering credit cards, consumer loans, and private banking services to the mortgage unit's 1.2 million customers - and offering mortgages across equally diverse product lines.

Mr. Kovacevich said the mortgage unit's involvement is key to the cross- selling blitz. Norwest customers - from mutual fund investors to checking account users - often need mortgages, he said.

And mortgage loans are the kinds of profitable products that Norwest needs to stay ahead of competitors, Mr. Kovacevich said. "The war we are in will be won on the field of revenue."

Norwest Mortgage's president, Mark Oman, says it will take tremendous cooperation among operating units for referrals to begin flowing. "The key to success is how well the group works together as a team," he said.

Observers agree. "Cross selling is still in its early stages," said Stan Ross, managing partner at E&Y Kenneth Leventhal Real Estate Group, Los Angeles. "So far there has been limited success."

Much depends on whether banks can reach a lot of prospects without sacrificing the personal touch that keeps customers coming back, he continued.

"You look at their approach," said Mr. Ross. "Did they use a personal approach or a mailer? Bankers have to be very proactive in making sure the customer understands the service."

Because Norwest has a broad network of mortgage offices, it has a strong shot at making its aspirations a reality, said Moshe A. Orenbuch, banking analyst with Bernstein Research.

With its hundreds of mortgage offices, Norwest could create "a nationwide financial services network" that offers a range of retail products, Mr. Orenbuch said.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER