Even as banks struggle to build sales cultures for insurance products, the market is demanding a customer-based approach, the keynote speaker at a bank insurance conference here said.

Banks must develop products that meet demographic needs, not just sell what is available, said Steve Moeller, the president and chief executive officer of American Business Visions, an investment and insurance consulting firm in Tustin, Calif.

Mr. Moeller addressed nearly 400 bankers and service providers Monday at the Financial Institutions Insurance Association annual convention.

"You must change or be left in the dust," he said.

When customers had few choices it was enough to just offer the product, Mr. Moeller said, an approach he compared to Henry Ford's sales pitch for the Model T. The Ford Motor Co. founder is credited with saying, "The customer can have any color he wants so long as it's black."

Competition has made it necessary to offer a variety of insurance products, he said.

But offering choices can be a double-edged sword, since it prompts customers to shop around more, Mr. Moeller noted. Banks therefore need that extra layer of service, he said.

"Clients don't want to be sold," Mr. Moeller said. "They want to be advised."

The concept struck a chord with many conference goers.

"I think he's right on," said Stephen Karp, director of financial services for American Bank Holding Co. of Corpus Christi, Tex.

American Bank is putting together an ambitious insurance plan that Mr. Karp said will avoid hard sales tactics. But insurers have not gone far enough in developing products tailored to banks, he said.

"We still see the product focus," agreed Carmen F. Effron, president of C.F. Effron Co. of Westport, Conn., and former head of insurance at BankBoston Corp. She said it will be difficult and time-consuming for banks and product providers to shift to a customer focus.

Mr. Moeller said success stems from focusing on what people want and need, because "when you have what the customers want, the products will sell themselves."

"Think of Charles Schwab. Is he chasing customers or are they chasing him?" he asked.

The first step is to target a profitable niche. And niches are people, not products, Mr. Moeller said.

He said to take demographics - such as age, occupation, or neighborhood - and consider the psychology and needs of prospective customers.

Banks have used various hooks to promote their business and woo customers, like sponsoring a golf clinic or other event, Mr. Moeller noted. "The further you get away from insurance, the more you sell," he said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.