A Consumer Advocate’s View On Financial Services Cross-Selling

A recent New York Times article about financial supermarkets reports that:

Consumers should think carefully before combining their financial accounts with one company, said Barbara Roper, the director of investor protection at the Consumer Federation of America, a consumer advocacy group based in Washington. She said the flip side to the convenience may be a decrease in investor privacy and data security.

FIRST, she pointed out that if a hacker broke into a company’s computers, “then potentially they will know all of your sensitive information.” She also said that people who combine their checking and brokerage accounts with one company should be prepared for “cross-selling,” the industry’s term for marketing many different financial products and services to customers.

She advised customers to shop around before buying additional financial products, like mortgages and CDs, and not just to accept the rate at a company where they already have an account. “Mortgages are a great example,” she said, “because the difference in cost over the life of a mortgage can be truly astronomical.”

It’s 2007, Barbara. Have you seen the research? Nearly six of ten credit card applicants, and almost half of checking account applicants, researched their decisions online. And that doesn’t even count those who researched offline. But thanks for the great advice.

Second, did you know that many consumers who open multiple accounts with one firm do so to get better rates or lower fees? Convenience and better pricing! All in one deal! It’s wonderful, you should try it — I promise I won’t tell you anyone you work with that you’re cozying up to a big bad, evil bank.

Third, are you aware of how most firms maintain their data? It seems very unlikely to me that a hacker who gets into a bank’s checking account data would also — at the same time — be accessing the brokerage or credit card systems. No doubt that privacy and security are important issues — but those concerns are not escalated with multiple account ownership.

And lastly, if you do open multiple accounts with one firm, I assure you that you won’t be the only one who gets cross-sell offers. Even customers with just one account get cross-sold. Those big bad evil banks don’t discriminate (at least not on that basis).


There a lot of reasons why financial services firms have not been as successful cross-selling as they hoped or would like to be. But it benefits neither side of the equation — financial firms or consumers — to have “advocacy” groups raise false concerns about cross-selling or cross-buying.

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