Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:New Study Concludes Banks Need to Follow Europe's Lead Not Rated 3.0 Email Routing List Email & Route  Print Print
Tuesday, March 23, 1999

New Study Concludes Banks Need to Follow Europe's Lead

Reported by Jason Shank

A new study, Putting It Together: Convergence Strategies for Banking, Insurance, and Investments conducted jointly by the Bank Administration Institute (BAI) and The Boston Consulting Group (BCG) has concluded that U.S. banks must imitate their European counterparts by integrating insurance products into retail business lines and target those products to mass-market bank customers.

In the face of rapidly eroding "share of wallet" and retail banking profitability, insurance presents a window of opportunity to cement and increase profitable relationships with market segments that trust and patronize banks and would be most willing to purchase life and other types of insurance from local branches, according to the study. Further, existing bank infrastructure enables banks to sell and service insurance policies at a cost lower than traditional insurers do.

The study also suggests that the increased focus on the distribution of investment vehicles such as mutual funds at the branch level will continue to be important, yet banks should view investment products primarily as a defensive strategy aimed at keeping customers and generating incremental revenue.

"Major segments of consumers who use banks chiefly for deposit and credit products are under-insured and considered unprofitable by traditional insurance companies. If banks simplify insurance products and effectively train branch salespeople, these segments can be lucrative insurance customers for banks. If banks don't act quickly, other providers that have made inroads with mutual funds and other financial products will win the untapped insurance business first," said Thomas P. Johnson, president and chief executive officer of BAI. "Insurance and, to some degree, investments represent new frontiers for banking, but timing is key."

"While many banks have already entered these new product markets, most have achieved only limited success because they've made half-hearted commitments," said John Garabedian, one of the BCG vice presidents who oversaw the study. "For instance, in insurance, they've either `rented' their customer lists to insurers in return for a small commission or have simply duplicated traditional, high-cost insurance distribution. Banks need to make a commitment to improving the consumer insurance experience and leveraging elements of their existing administrative, marketing and distribution infrastructure to provide these products at a lower cost and with wider margins. By using their own networks efficiently, banks have the potential to double their profit per customer."

According to the report, if banks made a major commitment to insurance and a more narrowly targeted commitment to investments, within five years banks could increase retail revenues by nearly fifty percent.

The European model, known as "bancassurance," has increased profitability by fully integrating insurance and investment products with traditional retail banking products.

"Bancassurance has been extremely successful, and it provides a compelling model for retail bankers in the U.S.," said BCG vice president Robert Morette. "Bank sales of life and pension insurance is outpacing overall insurance sales in all major European countries. In France, banks own 50% of the country's life and pension markets, and in Spain, the banks have a 30% share. In the U.S., commercial banks have less than 1% ownership of the insurance market."


The entire study can be ordered via the BAI's website at www.bai.org or at 1-800-224-9889. 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

3.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2025: Q3Q2Q1
2024: Q4Q3Q2Q1
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly


  1. 2025 MMI Women in Advisory Solutions Forum, Jul 15-16
  2. MFDF Director Discussion Series - Open Forum (Philadelphia), July 15
  3. MFDF webinar - M&A and Consolidation in Asset Management, July 16
  4. Nicsa webinar - How Trusted GenAI is Transforming Data Access in Asset Management, July 16
  5. WE Denver - Dinks & Drinks, July 17
  6. MFDF webinar - ETF Conversions, July 17
  7. MFDF Director Discussion Series - Open Forum (New York), July 22
  8. MFDF Ask Anything webinar - AI Edition, July 24
  9. MFDF webinar - Use of Derivatives by RICs, July 29
  10. MFDF Director Discussion Series - Open Forum (Columbus, Ohio), August 20
  11. Samfund Soiree Boston 2025, August 21
  12. MFDF webinar - The Audit Committee Chair's Guide to Balancing Duties and Emerging Issues, September 3
  13. ICI ETF Conference, Sep 8-10
  14. Nicsa webinar - Reimagining Reconciliation: AI, Regulation, and Capital Markets Transformation, September 10
  15. MFDF webinar - Series Trust Funds - Compliance and Board Reporting, September 10
  16. MFDF In Focus - Board Oversight of DEI in Current Landscape, September 11
  17. MFDF webinar - MFDF 15(c) White Paper Webinar Series: Part 4 – Enforcement Action Takeaways, September 16
  18. MFDF webinar - Latest in Closed-End Funds Litigations, September 23
  19. MFDF webinar - Fixed Income Insights: Navigating Market Trends & Opportunities, September 24
  20. MFDF webinar - Risk Management Essentials for RICs and Boards, September 29
  21. MFDF webinar - Diligent - Tools for Fund Board Book, October 1
  22. 10th annual Fuse Forum, October 8
  23. MFDF webinar - Essential Strategies in Board Oversight of Operational Risk Management, October 14
  24. 2025 MMI Annual Conference, Oct 15-17
  25. MFDF webinar - Series Trust Funds - Effective Board Relationships with Advisers, October 15
  26. MFDF In Focus webinar - Audit Committee Chair, November 5




©All rights reserved to InvestmentWires, Inc. 1997-2025
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use