Cross selling will become a necessity in the mortgage lending environment in 2012, it has been claimed.
Deloitte's 2012 Australian Mortgage Report has argued that low system growth and heavy discounting in 2012 will force lenders to focus on cross selling wealth and insurance products. Deloitte called cross-selling "the holy grail" of mortgage lending in 2012.
"Typically a high touch model, this will involve lenders needing to rethink the current simplistic approach of 'would you like insurance with that?' which is done post-approval by often inappropriately trained staff," the report said.
Instead, banks will have to integrate mortgage lending with their planner operations. It indicated that banks which do this, as well as understand "the role of education and needs-based advice with the mortgage sale", will succeed in cross-selling.
Deloitte predicted 2012 will see system growth at 5% rather than the double-digits which defined the 1990s and much of the 2000s. Along with this, the company predicted that strong price discounting will continue throughout the year, placing a strain on profitability. In this environment, Deloitte said cross-selling would prove a necessity.
"The margins generated on such cross sell will be important to balance the price war on the primary mortgage," the report said.
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