A well-known consultant has some bad news for bankers: Three- fourths of all cross-selling of products and services is unprofitable.

That's the assessment of James McCormick, president of First Manhattan Consulting Group, who advises banks on how to wring the most profit from retail customers.

Mr. McCormick, speaking this week at a convention of the Consumer Bankers Association, said banks mistakenly believe increasing volume of customers means more profits.

The problem? Banks often offer attractively priced products that draw customers who won't use other products and services, Mr. McCormick said.

"A lot of that holds credibility," said Emerson Brumback, executive vice president and director of national retail distribution for Columbus, Ohio- based Banc One Corp.

However, Mr. Brumback said while some cross-selling is unprofitable, he disagrees that it's as unprofitable as Mr. McCormick claimed.

Mr. McCormick specifically chided banks that offer free checking accounts, high interest rates on certificates of deposit, and savings accounts with no minimum balances in the hope that customers will buy other products. These offers are "misguided," Mr. McCormick said.

Mr. McCormick's assessment flies in the face of the major strategy at TCF Financial Corp., Minneapolis, a pioneer of the free checking account.

Robert Evans, vice chairman of the $7 billion-asset thrift, scoffed at Mr. McCormick's assertions about free checking. Mr. Evans said such accounts make plenty of money for TCF, which views them as cheap funding for loans.

Moreover, he disagreed with the consultant's negative view of cross- selling. Mr. Evans said his thrift profits from advice Mr. McCormick gives to other banks, because they lose customers by discontinuing loss-leader items and boosting minimum balances for checking and savings accounts.

"Every year this guy McCormick comes in and tells (banks) how much their minimum balance should be," he said. "If it's $800, he'll say 'you've got to raise it to $1,000,' and next year $1,200, and the next year $1,500.

"And every time they charge customers $3.50 to see a teller, we get a wave of new accounts," Mr. Evans said.

Mr. McCormick favors charging customers for virtually all services, including transactions through tellers, automated teller machines and telephone banking.

Banc One's Mr. Brumback agreed that the exploding use of ATMs and telephones has cost banks money. He said Banc One has no plans to charge for telephone banking but has begun charging noncustomers for ATM use and is charging teller fees in some markets.

TCF said it charges its customers when they use other banks' ATMs, and charges noncustomers in Chicago who use TCF teller machines.

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