1. Revenue growth through cross selling Roy Andersen 14 October 2002 Roy Andersen 14 October 2002

2. Is cross selling a winning strategy? Cross selling has triggered financial services consolidation but analysts sceptical about benefits

3. Forms of cross selling Why cross sell? Bancassurance  Models  International experience  Liberty experience Conclusion Forms of cross selling Why cross sell? Bancassurance  Models  International experience  Liberty experience Conclusion Content

4. Cross selling is marketing additional products based on current client relationships Products could be manufactured by different entities

5. The perfect service Investment product Pension plan Homeowners’ cover Life Policy (to cover bond) Home loan Credit card Current account

6. Agent exposes client to wider range of products Can alienate client if:  Feels pressurised  One product fails Client informed of additional products via statements or mail shots Downside “junk mail anger” Detracts from original point of contact Direct cross sellingIndirect cross selling

7. Reduction in customer acquisition cost:  Costs shared over many more products  Electronic banking lowers costs even further Reduction in customer acquisition cost:  Costs shared over many more products  Electronic banking lowers costs even further Why cross sell?

8. Protection from competitors:  Locks them out from clients  Avoids defection to other one-stop providers Leverages off reputation:  Clients trust certain institutions/ brands Protection from competitors:  Locks them out from clients  Avoids defection to other one-stop providers Leverages off reputation:  Clients trust certain institutions/ brands Why cross sell?

9. Client convenience:  One-stop service Ability to leverage all distribution channels:  Channel must suit the economics of the product Client convenience:  One-stop service Ability to leverage all distribution channels:  Channel must suit the economics of the product

10. Bancassurance Bancassurance: Selling of insurance products by banks Assurbanking: Selling of banking products by assurers

11. Bancassurance Answer to:  Commoditisation of banking products  Squeezing of insurance/investment product margins But margin is shared

12. Bancassurance models Bank provides leads to insurers Common to Europe High advice products best Insurer provides products to banks Also common in Europe Low advice products best [1][2] Liberty / Stanbank hybrid of 1 and 2

13. Bancassurance models Joint venture Closer to assurbanking All 4 models work Full merger Risks high compared to benefits Don’t have to buy the cow [3][4]

14. Well established in Spain, France and Italy Becoming relevant to Scandinavia, Belgium and Netherlands In USA restricted by previous Glass - Steagall Act Hopeful signs from L & G/Barclays, Irish Life/Irish Permanent Building Society, CGNU/RBOS Well established in Spain, France and Italy Becoming relevant to Scandinavia, Belgium and Netherlands In USA restricted by previous Glass - Steagall Act Hopeful signs from L & G/Barclays, Irish Life/Irish Permanent Building Society, CGNU/RBOS International trends Analysts sceptical

15. Low SA savings levels do not bode well (15% of GDP) - but Rich are getting Richer High savings/pension reform Immature demand for financial services High savings/growth in disposable income Absence of well developed IFA network Markets where bancassurance succeeds

16. Large bank client base Smaller low cost insurer Commitment by bank to open client base The insurer manages the bank sales force (SBFC +18%) Ingredients for success - bancassurance

17. Client profile synergy “Embed” the simple products Aligning employee incentivisation Ingredients for success - bancassurance It’s all about relationships

18. Stanbank Products STANLIB/Ermi- tage Products Liberty/Char- ter Products Bank branches SBFC e-Bank Call centres Liberty agents/franchises IFAs Website Stanbank / Liberty model

20. Scale  AUM R135bn  Biggest unit trust company Pooling of talent Leveraging of distribution channels using bank and insurance licences for product development Scale  AUM R135bn  Biggest unit trust company Pooling of talent Leveraging of distribution channels using bank and insurance licences for product development Motivation for creation of STANLIB

21. Delivering more for retention than for new sales CRM - Liberty experience

22. No one model Success and profitability depend on attitude and relationships Conclusion