Banks may be waking up to the idea that their credit card customers are prime candidates for cross-selling.

If the banks follow through, customers could get caught in a cross-fire of competition: Their primary checking-account banks will be vying with their card issuers for a more encompassing service and credit relationship.

"It's something we have been telling bankers for a long, long time," said Michael Auriemma, president of the Auriemma Consulting Group, Westbury, N.Y. "If you have one relationship with a customer, the opportunity to sell other banking relationship services is tremendous."

Because consumer banking and credit cards evolved separately and are still in separate departments at many banks, marketing coordination has been limited. Customers who carry their primary bank's credit card frequently prefer to use another that pays rebates or rewards.

Auriemma Consulting Group has conducted a consumer survey that found many cardholders would consider buying other services from their preferred credit card banks.

At the same time, Payment Systems Inc. research has shown that about one-fifth of all people with general-purpose credit cards prefer to use the one issued by their main bank.

With banks and virtually all credit card marketers increasingly intent on building more multi-account relationships with customers, the opportunity is obvious and the battle lines are clearly drawn.

Industry experts said the Auriemma study, conducted over a two-month period and published by both the consulting firm and Sanford C. Bernstein analyst Moshe Orenbuch, underscores the marketing potential in a credit card relationship.

For example, 30% said they would buy travel services from their credit card company, 26% car loans, 22% mortgages, 22% home banking, and 14% securities services.

These findings also indicate that card issuers, including those associated with nonbank companies, may pose a threat to the traditional banking base.

Mr. Auriemma said historical cultural divisions within banking have been an obstacle to cross-selling.

"The numbers show some willingness on the part of the consumer to buy other financial services products from their primary card issuer," said Mr. Orenbuch. "On the other hand, they also show that the value of the brand, such as the one American Express has, is an important advantage."

Indicating the importance of branding, and particularly American Express card relationships, people who use that brand most frequently were more receptive than average to obtaining additional services through that company. The average respondent among the 762 in the Auriemma survey was 46 years old, married, employed with annual income above $53,000, and a homeowner.

It was Mr. Orenbuch's idea to probe cross-selling potential. Auriemma Consulting invites such suggestions for its Cardbeat newsletter. Mr. Orenbuch noted that the credit card specialists First USA Inc. and Capital One Financial Corp. have been talking about diversification through cross- selling for more than a year.

Both First USA and Capital One chartered thrifts earlier this year to offer additional loan products.

"If the people do as they say, (cross-selling potential) is pretty good," Mr. Orenbuch said. "If it's a third of your card base, and you have 10 million customers, that's three million incremental customers for those products."

According to 1995 data from Payment Systems Inc., Tampa, a third of cardholders have a credit card from the institution with which they have their primary banking relationship, usually defined by a checking account.

But loyalty to the primary-bank card falls off. While 22% say they use their primary-bank card most often, 33% prefer another bank's card, and 20% more reach first for cobranded or rewards cards, presumably because of rebates or frequent flier miles.

James L. Accomando, president of Accomando Consulting Inc., Fairfield, Conn., said the "migration" of credit card relationships is similar to previous trends in investment products and mortgages.

"When it came to a mortgage, the customer would say (to the primary bank), 'Help me, it's the biggest transaction of my life,'" Mr. Accomando said. "Now people are going to a mortgage broker who might represent many lenders, and the consumer is shopping primarily for price."

He said the Auriemma study may show consumers attach a high value to their credit card and would expect at least the same level of service on secondary financial products obtained from the same company.

Mr. Auriemma agreed: "The customer is saying, 'What I want is a good product or service.' This should be motivation for the primary bank to say, 'I've got to sell them that product first.'"

Mr. Accomando warned that a card brand like American Express, Visa, or MasterCard, or a cobranding entity like AT&T or General Motors, is typically stronger in the customer's mind than the name of the issuing bank.

"I would not leave it to the consumer to put two and two together," he said.

Diana Sun, a spokeswoman for Capital One in Falls Church, Va., said it sent out 6,000 test mailings in 1995, some of which were for home equity and installment loans. She said she was not surprised by the cross-sell survey.

"It is equally important to bring the right product to the right customer, and truly customize products to customers," she said.

Mr. Accomando pointed to differences between such card issuers as Citicorp, which has both a national credit card and a national retail presence, and People's Bank of Bridgeport, which markets cards nationally but does retail banking only in Connecticut.

"Citibank has relationships with one in four U.S. households," he said. "Citibank has to cross-market its portfolio because it is a natural."

People's, he said, "would have difficulty selling outside the bank's natural geography." "I think a couple of years from now, you won't see monoline issuers," said Mr. Orenbuch, referring to companies like First USA that built their business entirely on credit cards. "One way or another, they will diversify into other products or end up being combined into a company that has other products."

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