The detrimental effects of the financial crisis are still evident in Bank of America’s (NYSE:BAC) financials. In every single year of Chief Executive Officer Brian Moynihan’s three-year tenure, revenue has dropped as he has dumped assets, repaired the bank’s balance sheet, and paid out more than $40 billion to settle claims related to defective mortgages. In the wake of these maneuvers, the chief executive has integrated the bank’s remaining business units more tightly in order to generate high profits from its clients — a strategy that has helped Wells Fargo (NYSE:WFC), but fallen short for Citigroup (NYSE:C).
Now Moynihan, desperate to staunch this flood, has organized a two-day event in Chicago, scheduled to begin Wednesday, with more than 100 of the bank’s regional managers. As a source with direct knowledge of the project told Bloomberg, these leaders will be pushed to boost slumping revenue and be judged on how much progress they have made in selling the bank’s products — from credit cards to mortgages — to its 53 million customers.
“We’re now at the point with Bank of America when it’s about boots on the ground rather than the latest lawsuit,” SNL Financial analyst Nancy Bush told the publication. In the past, the bank was “notably lousy” at cross-selling, she added, referring to the lender’s efforts to peddle additional products and services to its existing customers. As it usually functions, that strategy involves asking a depositor to take out a mortgage or add a credit card to their account.
Former Citigroup Chief Executive Officer Sanford Weill used the idea of cross-selling to justify the financial supermarket he devised in 1998. As Bloomberg noted, that marketplace merged a consumer bank with an insurer in an attempt to provide one-stop shopping for customers. However, Vikram Pandit, the bank’s CEO until last year, disavowed the strategy before he was ousted…
Moynihan’s plan is rooted in a similar concept, but it takes the strategy a step further. Each of the regional leaders — or market presidents — will be graded on whether they hit targets in Bank of America’s 30 different categories of referrals, explained the publication’s source. One metric used in the referral system may include how many leads commercial bankers send to financial advisers.
His latest effort to boost revenues coincides with Bank of America’s new marketing campaign. Scheduled to begin this month, the advertisements will highlight how customers can be served in all areas of the bank’s business: deposits, credit cards, mortgages, and wealth- management. “We’re very focused on managing the company to harness the power of every connection we can make for our customers and clients,” said the bank’s spokesman Larry DiRita to Bloomberg.
But cross-selling notoriously has a mixed record in banking, as Portales Partners analyst Charles Peabody told the publication. However, he noted that Wells Fargo been the most effective of all big U.S. banks to implement the strategy, selling an average of 6 products per households and 7 for each corporate relationship, according to a recent presentation. “Everyone says they can do this, so it’ll be interesting to see if Brian can pull it off,” Peabody said. Bank of America, with its $8 billion annual cost-cutting goal, must also improve revenue to reach its profit targets, he added.
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