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Opportunities for banks to cross-sell insurance products in Greece

Article  in  Journal of Financial Services Marketing · September 2004

DOI: 10.1057/palgrave.fsm.4770139

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Journal of Financial Services Marketing (2004) 9, 34–48; doi:10.1057/palgrave.fsm.4770139

“OPPORTUNITIES FOR BANKS

TO CROSS-SELL INSURANCE PRODUCTS IN GREECE ”

Dr. Konstantinos Lymberopoulos*

Ioannis E. Chaniotakis**

Magda Soureli ***

Acknowledgements: The authors would like to thank

Professor Barbara Lewis and Miss Nancy Black for their helpful suggestions and
comments on earlier drafts of this paper.

* Adjunct Professor, Department of Business Administration, Business School,

University of the Aegean, 8 Michalon str., Chios, Greece. Tel. +30-210-
9323656, e-mail lymper@teledomenet.gr

** PhD Researcher, Department of Business Administration, Business School,

University of the Aegean, 8 Michalon str., Chios, Greece.
Tel +30-6977-509026, e-mail Ichaniotakis@agrotiki.gr

*** PhD Researcher, Manchester School of Management, UMIST, U.K.

Tel +30-210-3298027, e-mail m.soureli@postgrad.umist.ac.uk

1
 “OPPORTUNITIES FOR BANKS

TO CROSS-SELL INSURANCE PRODUCTS IN GREECE ”

Abstract

Aims to identify whether or not there are opportunities for banks in Greece to
cross-sell effectively insurance products through their branch network. In
addition, to investigate the areas of insurance product portfolio that could
have a better potential to be distributed by Greek banks, and identify the
profile of potential customers. For this reason a questionnaire was designed
and completed by 720 bank customers. The analysis showed that the greatest
opportunity comes from the fact that awareness of consumers for the offering
of insurance products by banks is low in contrast to their willingness to use
banks as insurance products providers which is very high. Additionally, there
are indications that, based on consumer attitudes, there are identifiable
market segments which are more attractive. In conclusion, the paper
discusses the managerial implications of the findings and proposes
suggestions for further research.

2
 “OPPORTUNITIES FOR BANKS

TO CROSS-SELL INSURANCE PRODUCTS IN GREECE ”

_____________________________________________________

Introduction

During the past decade, the financial services sector has undergone drastic
changes.1 Deregulation, internationalisation, and the emergence of new forms
of technology have all created a highly competitive market place,2,3,4 where a
range of diversified products are offered under the banner of “financial
services”.5 Moreover, the distribution of financial services has evolved rapidly.
New methods of distribution have emerged, many transactions have become
automated,6 and as a result any given product may be available through a
varied set of channels.5

Consumer behaviour has also changed.2 In recent years, there has been a
dramatic decline in customer loyalty towards banks,7 while customers’ price
sensitivity and financial involvement has been increased.3 A desire for “value
for money” and comparisons between products, providers and channels have
become common practice.8 In addition, the changes in the financial services
market have made the selection of financial providers a complex process for
many consumers.9

The fierce competition existing between banks and diminishing customer

loyalty have tightened profit margins and generated the need for cost
reduction and new substantial sources of revenue.1 In this frame, the role of
bank branches has changed from the “old traditional branches”, where mainly
transactions were handled, to revenue enriching sales centres.10 This change
has seen great support by the development of new technological applications
resulting into higher operations capacity,2 and enables banks to increase their
profitability.

3
Taking all of this into account, financial institutions realise that the key to
revenue growth is working harder improving customer relationship
management and implementing cross-selling strategies.11 Since the old
barriers between banking and insurance have been broken down, the
traditional banks have been replaced by integrated financial service providers
offering a wide range of financial services.13 To that end, many banks are
trying to increase their cross-sales ratios by expanding their services into the
insurance sector.2

Bergendahl2, who refers to this process of selling insurance products over the
bank counter using the term bancassurance, states that banks have been
considered as the ideal vehicles for selling insurance products, as they
possess an established distribution channel through their branch network and
can access a very large customer base. Furthermore, the reputation of banks
as safe institutions inspires the trust and the confidence consumers need to
feel when purchasing insurance products.2

In addition, from the banks’ point of view, there are several reasons why they
would be interested in selling insurance products. Besides the related sales
margins or commissions, banks are able to use their fixed capacity resources
more efficiently, take advantage of enormous economies of scale and deal
with demand fluctuations for ordinary banking products.2

Bancassurance may also help banks to attract new customers and to build
strong relationships with existing customers. As customers acquire additional
services or products from a financial service provider, the number of contact
points with the provider increases, leading to higher switching costs for the
customers. 12

This article examines the opportunities for Greek banks to distribute

effectively insurance products through their bank branches. The choice of
Greece is based on the fact that the Greek banking system is a recently
deregulated and increasingly competitive one, where bancassurance is still at
an early stage of development. Hence, it offers the opportunities for
generalising results for countries with such similarities.

4
The first section of this paper provides background information and previous
research studies are reviewed. The research objectives and the research
questions are then stated. The methodology is presented briefly, followed by
the analysis and the discussion of the research results. Finally, the research
limitations and the implications for managers are discussed and some
directions for future research are suggested.

Previous related research studies

A number of marketing researchers have focused on banks’ cross-selling

opportunities and bancassurance. For example, there are several studies,
which have related cross-selling opportunities to the development of common
acquisition patterns of financial products and/ or to the identification of
specific customer segments as best prospects for successful cross-
selling.7,12,13 According to these studies, customers’ demographic data such
as income, education, customers’ life cycle, financial sophistication, age, and
gender can predict the probability of acquisition of financial products and
services, and may affect customers’ likelihood of purchasing another product
from the same financial service provider.

Other researchers have tried to identify the factors that affect the banks’
success in insurance selling, but without taking the customers’ side into
account. As such, Bergendahl2 examined the circumstances under which
bancassurance can be a profitable strategy for a bank and he showed that
both life and non-life insurance may be successfully sold if the number of
customers per branch is sufficiently large and if the cross-selling ratio is
acceptable.

In relation to product characteristics, Hislop et al.3 have emphasised the

impact of product complexity on the success of banks in selling insurance
products, suggesting that banks are more successful where customers want
to buy simple products, e.g. single premium investment products rather than
complex regular premium private pensions. Similarly, Morrison and Roberts14
highlighted the significance of product channel interactions and the
need to consider the degree of congruence between a product and a channel

5
when evaluating the factors influencing the decision to adopt/use a channel
for a purchase.

McGoldrick and Greenland15 tried to illustrate customers’ most likely provider

source (bank/ building society/ insurance company/ employer) in relation to
four major financial services (mortgages, life policies, personal pensions and
loans). They assessed the viability/ suitability of each channel for each
product from the customers’ perspective. According to their findings, the
traditional suppliers are deemed to be the most likely option in very many
cases. The banks score highly in credibility when selling mortgages and
major loans, while customers prefer insurance companies for life policies and
personal pensions.

Black et al.5 examined customers’ choice of financial services distribution

channels. They showed that consumer confidence, lifestyle factors,
motivations and emotional responses influence the customer’s
choice, while product, channel and organisational factors, such as image
and reputation, are also significant. Particularly, they found that affective
elements are critical and product complexity, perceived risk and personal
contact are highly appreciated.

Lee and Marlowe9 tried to provide a better understanding of how consumers

choose their financial institution. Although consumers’ decision-making criteria
may vary dependent on their experiences, socio-economic, and
demographic characteristics, Lee and Marlowe9 found that the most
important criterion that consumers use in selecting a financial institution is
convenience in terms of location of office and/or other convenience
features. Retail fees are the second most frequently reported decision-
making criterion, followed by the range of services offered and the existing
personal relationships.

Finally, Boyd et al.16 also explored customer behaviour in relation to the

selection of a financial service provider. They examined customers’ scores on
selection criteria, such as reputation, and friendliness, by taking into
account customers’ demographic characteristics, e.g. size of household,

6
household income, age and gender of household head. The results of the
study revealed that factors such as reputation, interest charged on loans, and
interest paid for savings accounts were critical, while less importance was
attached to friendliness of employees and the modernity of the facilities.

All these studies presented above highlight the importance of demographic

characteristics in purchasing financial services from a specific provider.
Moreover, a number of issues regarding consumer behaviour are generated.
Customers’ choice of insurance service provider is closely related to product
complexity, therefore customers’ perceived level of the providers’
expertise may affect the development of attitudes. Furthermore, the role of
customers’ trust in the provider and its personnel is emphasised,
while the impact of honesty, provision of information, and sense of no
psychological pressure is also noted.

Nevertheless, little has been written on customer attitudes towards insurance

selling through bank branches. This is because it is presumed that consumers
prefer “one-stop shopping” and are willing to purchase different types of
financial products and services (i.e. insurance) from the same institution.9
Still, there may be also customers who prefer to do business with a number of
financial service providers in order to diversify their risk and to ensure a
quality level of the services purchased. In this case, the banks’ efforts to
provide a full range of financial services may not be welcome and therefore
the authors’ aim to further explore customers’ view on this matter becomes
justified.

Research Objectives and Research Questions

This paper tries to identify the opportunities for banks to cross-sell insurance
products via their branch network. Particularly, considering the identified gap
in the existing literature, this project gives a special emphasis on customers’
attitudes towards banks’ efforts to sell insurance products.
Successful cross-selling strategies require providers to create a deep
knowledge of their customer in order to design tailor made, cost effective
marketing actions. This knowledge is related to the levels of insurance

7
products current use and the use of banks as insurance products
providers, as well as the reasons that make customers to have this
preference.
Moreover, it is important to know the level of customer awareness that
banks offer insurance products through their branch network because, as
Rogers and Shoemaker17 insist that the adoption or rejection of a product or a
service begins when the consumer becomes aware of it.

Furthermore, if customers do not think of banks as potential providers of

insurance products, no opportunities for promoting such products exists, even
if banks follow aggressive cross-selling strategies. Nevertheless, no piece of
research has examined customers’ intentions and attitudes in buying
insurance products from banks. Consumer behaviour studies have solely
focused on the customers’ choice of financial service provider,5 but not in
relation to the purchase of insurance products.

Taking all these into account, it is important to investigate whether or not

consumers are willing to purchase insurance services from banks, and
what the factors are that may lead customers to choose banks instead of
insurance companies when buying insurance products.

In this frame, the paper’s main objectives are:

1. To examine whether or not retail bank customers are aware of

insurance selling through bank branch networks, and are willing to
purchase insurance products from their banks.

2. To identify both the reasons that customers would buy insurance from
banks and the particular insurance products that could be cross-
sold by banks.

3. To investigate the factors that express customers’ attitudes towards

banks and insurance companies in relation to the provision of
insurance products.

8
 4. To test potential relationships between these factors and
customers’ demographic characteristics, awareness, and the
level of usage of insurance products.

5. To identify specific customer segments which are more likely to

purchase insurance programs from banks.

In order to meet these objectives, the paper will try to answer the following
research questions:

 What is the level of current use of insurance products?

 What is the level of current use of bancassurance services?

 What are the reasons that would make customers cross-buy

insurance from banks?

 What is the level of customers’ awareness of their bank selling insurance

products and does this affect their willingness to buy?

 Which specific insurance products would they prefer to be cross-

sold by banks?

 Do customers feel equally about both kinds of financial service

providers in terms of trust, staff competence and service
expertise? Are there specific factors to express customers’ attitudes
towards purchasing insurance products from banks and insurance
companies? Which are these?

 What are the characteristics of customers who would prefer banks

as their insurance providers?

The Greek banking system

The Greek banking industry is made up of 59 banks, of which 20 are foreign

and 39 Greek (commercial, investment, co-operative and specialised credit
institutions). This size gives a total of 3113 bank branches, 175 outlets and
63407 employees. The industry is considered as concentrated since the top
six banking institutions in Greece control over 70% of the total assets (i.e.
National Bank, Alpha Bank, Eurobank, Agricultural Bank, Commercial Bank,

9
Piraeus Bank)18. For the provision of specific financial services, the majority of
Greek banks have created subsidiaries and most of the commercial banks own
an insurance company. Thus, the market is dominated by groups of
companies each established around a principal bank19.

After a decade of dramatic changes, the Greek banking system operates

today in a deregulated, increasingly competitive market environment. Thus,
Greek banks have made concerted efforts to change their ways of conducting
business and transform their organizational structures. They have proceeded
with a series of mergers and acquisitions. Since 1996, 16 mergers and
takeovers have occurred. In addition, Greek banks have formed alliances with
foreign banks; Commercial Bank with Credit Agricole and Piraeus Bank with
the ING Group20. Besides, the fast changing environment and in particular the
entry to the European Monetary Union (EMU) is expected to put additional
pressure on industry incumbents over the next few years to further improve
efficiency. The anticipated increase in competition and the renewed pressure
on spreads, highlight the imperative of operational efficiency as a minimum
for future viability for all banks21. Hence, banks in Greece, as in other
markets, search for new sources of income outside their traditional
operations, and view bancassurance as one of their first priorities.

The Greek banking system appears appropriate for the scope of this study not
just because of the bancassurance low maturity but also because, as in other
countries, it operates in a currently deregulated, increasingly competitive
market environment.

Research design and survey

A survey was designed and conducted between November 2002 and January
2003, in the greater area of Athens, the capital of Greece, in which more than
50% of the total Greek population lives. The target population comprised men
and women, over 21 years old who had co-operation with a bank or an
insurance company.

Non-probability sampling was implemented due to time and budget

restrictions. Particularly, the researchers followed the approach of Moutinho

10
and Smith22 and used quota sampling in order to reduce the high possibility of
sampling error, which characterises non-probability sampling, and obtain fairly
accurate results.23,24 The quotas of population elements in this study referred
to the age and the gender of the respondents and were based on the 1991
census of the Greek economic active population.25 The sample that was
actually drawn was in accordance with these quotas.

The researchers also used qualitative research in order to identify country-

specific circumstances (e.g. the main insurance products offered, - vehicle,
home, life, health, pension, unit link- and the way insurance distribution
channels work in Greece) that relate to insurance selling and may affect
customers’ attitudes. As such, several personal in-depth interviews with
insurance and bank marketing managers were carried out and contributed to
the survey questionnaire design.

In addition, for the design of the questionnaire a pilot survey was run with a
number of bank customers. This helped researchers to refine the way certain
questions were expressed as well as add a definition for the product “unit
link”, because very few knew what it was.

The final questionnaire, which was in Greek, was administered by personal

interviews to 720 participants, representing both genders and different age
groups. The informants to be interviewed were chosen based on convenience
criteria. Main demographics, as seen in table 1, were close to the targeted
population and were considered satisfactory.

Table 1. Respondents’ profile

SAMPLE DEMOGRAPHICS
DEMOGRAPHICS Number %
GENDER
Male 357 49.6 %
Female 363 50.4 %
AGE
21-30 188 26.1 %
31-40 136 18.9 %
41-50 198 27.5 %

11
 51-60 126 17.5 %
60+ 72 10.0 %
EDUCATION
Basic 62 8.5 %
Lyceum 218 30.3 %
Higher 108 15.0 %
University 278 38.6 %
Postgraduate 54 7.5 %
GROSS MONTHLY INCOME
- € 1000 172 23.9 %
€ 1001 - € 1500 170 23.6 %
€ 1501 - € 2000 154 21.4 %
€ 2001 - € 2500 107 14.9 %
€ 2501 + 117 16.3 %

The questionnaire included four main sets of questions. In the first set,
participants were asked about their co-operation with banks and insurance
companies, the usage of insurance products and their awareness in relation to
their bank offering insurance products. Moreover, customers’ willingness to
buy certain insurance products from their bank was explored. In the next part
of the questionnaire, customers’ attitudes towards the main distribution
channels were measured by means of three dimensions – trustworthiness
(trust), staff competence and service expertise - which were used in previous
research studies. Specifically, participants were asked to express their level of
agreement with 14 statements, which were related to whether they preferred
the insurer or the bank. For the measurement of all these items a five-point
Likert-scale was used (1 = strongly disagree to 5 = strongly agree).

Finally, in the last part, questions relating to the demographics of the

respondents were included. Specifically, gender, age, education, and income
were the parameters used to investigate the profile of customers.

For the analysis of the questionnaire, SPSS software was used. Firstly,
analysis of frequencies and cross-tabulations were performed. Moreover, in
order to identify whether or not there were any variables that could be

12
treated as indicators of customers’ attitudes towards insurance distribution
channels, principal components factor analysis was performed.

Finally, factor scores were analysed using various demographic data (e.g.
age, gender, education, income, and number of insurance products) as
dependent variables. In order to accentuate the dimensions expressed by
each factor, scales were converted to standard ten scores (sten) using the
formula z*2+5.5 thus giving a minimum score of 1 and a maximum of 10 with
5.5 standard deviation.

Results

Exploring the current use of insurance products and bancassurance

services

According to the descriptive statistics that were generated, only 0.3% of the
respondents have no insurance products. The insurance products with the
highest usage rates are vehicle (67.6%), life and health (36.3%) insurance
(see Table 2).

Table 2. Current use of insurance products

NUMBER PERCENT

(total = 720)

I use vehicle insurance 487 67.6%

I use life insurance 261 36.3%

I use health insurance 261 36.3%

I use home insurance 168 23.3%

I use pension insurance 156 21.7%

I use unit linked 40 5.6%

Although 94% of the 720 respondents co-operate with a bank, only 17.6%
have already used their banks as insurance providers. Of these customers,
the majority are of higher social classes (in relation to income and education),
over 30 years old and heavy users of insurance products (see Table 3). It
should be noted that, for convenience reasons, customers where divided,

13
according to their current use of insurance products, into light (up to 2
products), medium (3-5 products) and heavy users (more than 6 products).

Table 3. Profile of customers who have already used their bank in order to
buy an insurance product (127 users / 720 respondents -17.6%)

AGE -30 yrs 31-50 yrs 51+ yrs TOTAL

Number of users / Total 16 / 188 69 / 334 42 / 198 127 / 720
Number
Percent 8.5% 20.7% 21.2% 17.6%

GROSS MONTHLY INCOME - € 1000 €1000- + € 2500 TOTAL

Number of users / Total 21 / 172 762500
/ 431 30 / 117 127 / 720
Number
Percent 12.2% 17.6% 25.6% 17.6%

EDUCATION Lower -Medium Higher TOTAL

Number of users / Total 63 / 388 64 / 332 127 / 720

Number
Percent 16.3% 19.3% 17.6%

NUMBER OF PRODUCTS USED Light Medium Heavy TOTAL

38(1-2)
/ 286 57(3-5)
/ 317 32 / 117
(6-7)
Number of users / Total 127 / 720
Number 13.3% 18.0% 26.9%
Percent 17.6%

Exploring the reasons customers would buy insurance from banks

The main reasons stated by respondents for using their bank in order to buy
an insurance product, as seen in table 4, would be trust in the banks, good
financial terms, service quality and better communication. In addition,
customers stated that the use of other bank services, the existence of
personal acquaintances and the convenience of bank branches, would
be influential factors (see Table 4). Finally, not surprisingly, only 15.1% of
customers would prefer their bank because of its’ expertise in insurance
products.

14
Table 4. Reasons why customers would prefer their banks in order to buy
insurance products (more than one choice)

REASON NUMBER PERCENT

(total=720)

Trust 504 70.0%

Good terms 381 52.9%

(total = 720)
Service quality 341 47.4%

Communication 264 36.7%

Use other services 170 23.6%

Personal acquaintances 191 26.5%

Close to home – office 152 21.1%

Expertise 109 15.1%

Exploring awareness and willingness

In relation to customers’ awareness, only 53.5% of respondents are aware of

their bank selling insurance products. Besides, it seems that the brochures
found within the bank branch and from the bank employees are the two main
information sources for these customers (see Table 5).

Table 5. Source of information about the provision of insurance products by

banks (more than one choice)

SOURCE OF INFORMATION NUMBER PERCENT

(Total = 385)
Brochures within the bank branch 169 43.9%
(total = 385)
Bank employees 136 35.3%

Direct mail 85 22.1%

Advertising media 84 21.8%

Friends 56 14.6%

Moreover, customers who claimed awareness of their bank selling insurance

are of higher income, middle-aged, highly educated and heavy users of
insurance products (see Table 6). The results of the cross-tabulations that
were run support this finding, as they show that customer awareness relates
to age, income and education.

15
 Table 6. Profile of customers with awareness of their bank offering insurance
products (Number of aware customers =385)

AGE -30 yrs 30-50 yrs 50+ yrs TOTAL

Number of aware customers / Total 87 / 188 195 / 334 103 / 198 385 / 720

Percentage of customers who are aware

of their bank offering insurance products
46.3% 58.4% 52.0% 53.5%

GROSS MONTHLY INCOME - €1000 € 1000-2500 + € 2500 TOTAL

Number of aware customers / Total 79 / 172 227 / 431 79 / 117 385 / 720

Percentage of customers who are aware

of their bank offering insurance products
45.9% 52.7% 67.5% 53.5%

EDUCATION Lower – Medium Higher TOTAL

Number of aware customers / Total 190 / 388 194 / 332 385 / 720

Percentage of customers who are aware

of their bank offering insurance products
49.1% 58.4% 53.5%

NUMBER OF PRODUCTS USED Light Medium Heavy TOTAL

(1-2) (3-5) (6-7)

Number of aware customers / Total 152 / 286 167 / 317 66 / 117 385 / 720

Percentage of customers who are aware

of their bank offering insurance products
53.1% 52.7% 56.4% 53.5%

A great potential for banks for cross-selling insurance products comes from
the fact that, although not all respondents were aware of insurance offerings
from their banks, almost 85% of them agreed that they would be willing to
buy at least one insurance product from the bank. In addition, from analysing
customers’ willingness to buy a specific insurance product (e.g. vehicle
insurance), it seems that it is closely related to their awareness. In other
words, customers who are aware of their bank selling a specific insurance
product seem more willing to buy insurance products from their bank. On the

16
other hand, customer awareness has no impact on which of the insurance
products customers would prefer to buy (see Table 7). Vehicle insurance,
home and health insurance are the products, which both groups of
respondents are more willing to purchase from their bank.

Table 7. Willingness to buy insurance products from bank according to

awareness of offering (720 respondents)

AWARE NOT AWARE

(no =385) (no=335)
NUMBER % NUMBER %

I would buy vehicle insurance from bank 178 46.2% 138 41.2%
I would buy home insurance from bank 128 33.2% 74 22.1%

I would buy health insurance from bank 121 31.4% 79 23.6%

I would buy pension insurance from bank 119 30.9% 75 22.4%

I would buy life insurance from bank 113 29.4% 81 24.2%

I would buy unit linked from bank 53 13.8% 13 3.9%

I would buy at least one insurance product

325 84.4% 285 85.1%
from my bank*

* not directly asked, but calculated from answers to the above questions

Exploring consumer attitudes towards insurance providers

Analysing consumer attitudes towards the two main channels of distribution,

through descriptive statistics, all the mean scores were above the median
value of 3 with the exception of the statements that related to the expertise of
bank employees in insurance products (2.82), the trust in insurance companies
to cover all financial needs (2.37) and the lack of pushing from insurers in the
selling process of an insurance product (2.99). Furthermore, there are strong
attitudes towards the expertise of insurers (3.81), their ability to advise (3.62)
and to offer all the information needed (3.59). In general, customers believe
that they would trust more an insurer than a bank employee when purchasing
insurance products (3.58) (see table 8).

According to the above, there is an indication that consumers seem to prefer

insurers than banks as providers of insurance products. Nevertheless, it is

17
clear that consumers trust banks more than insurance companies to cover all
their financial needs.

Table 8. Ranking customer attitudes towards (trust) trustworthiness, staff

competence and service expertise of banks and insurance companies based on
mean scores

QUESTIONS MEAN STD

To what extent do you agree that …

L. … your insurer is expert in insurance products 3.81 0.96

J. … your insurer can advise you of insurance products 3.62 1.04

M. … your insurer gives you all the information needed 3.59 1.06

N. … you would trust more an insurer than a bank employee when 3.58 1.18
purchasing insurance products

G. … bank employees give you all the information needed 3.39 1.09

A. … your bank offers competitive insurance products 3.25 1.04

B. … you trust your bank for all your financial needs 3.22 1.13

E. ... bank employees would not push you to buy an insurance product 3.22 1.14

I. … you trust your insurer 3.16 1.20

C. … you trust the bank employees 3.11 1.14

D. … bank employees can advise you of insurance products 3.06 1.07

K. … your insurer would not push you to buy an insurance product 2.99 1.19

F. … bank employees are experts in insurance products 2.82 1.02

H. … you trust your insurance company for all your financial needs 2.37 1.09

A further factor analysis (principal components) was performed using the

SPSS software. According to the findings, as shown in table 9, two distinct
factors explaining 42.523% of total variance were identified using the Kaizer
criterion, i.e. having an eigenvalue higher than one. The method of extraction
was that of varimax rotation. The two-factor solution was adopted since no
other factors with an eigenvalue greater than one emerged, and those with

18
eigenvalues smaller than one only included isolated items, rather than a
group, so as to justify using them in order to create meaningful scale.

It is common practice, factor loadings of 0.7 and over to be considered of

significance in a factor analysis. However, these loadings are not always easy
to obtain with questionnaires not specifically designed for this purpose. A 0.5
loading, which represents a moderate loading, was chosen in this study to act
as a threshold and allow the inclusion of certain items in the scales created.
The aim was to create meaningful scales for data reduction purposes and not
to construct a measuring instrument, which would require stricter rules to be
followed.

Table 9. Factors related to customers’ attitudes towards insurance distribution channels

FACTORS QUESTIONS FACTOR

SCORES

To what extent do you agree that … F1 F2

FACTOR 1 I. … you trust your insurer 0.752 0.044

(F1) J. … your insurer can advise you of any insurance product 0.758 0.152
Trust in K. … your insurer would not push you to buy an
Insurers
insurance product 0.638 0.065
L. … your insurer is expert in insurance products 0.706 0.122
M. … your insurer gives you all the information needed 0.724 0.114
N. … you would trust more an insurer than a bank
employee when purchasing insurance products 0.553 -0.246

FACTOR 2 A. … your bank offers competitive insurance products 0.005 0.592

(F2) B. … you trust your bank for all your financial needs 0.145 0.567
Trust in C. … you trust the bank employees 0.125 0.660
Banks D. … bank employees can advise you of insurance
products -0.023 0.779
F. … bank employees are experts in insurance products -0.048 0.722
G. … bank employees give you all the information needed 0.134 0.544

E. ... bank employees would not push you to buy an

insurance product 0.088 0.465
H. … you trust your insurance company for all your
financial needs 0.329 0.200

19
 Explained Variance .249 .175

The first factor, which included questions I, J, K, L, M and N, named “trust in

insurers”, explained 24.997%, while the second one, which included questions
A, B, C, D, F and G, named “trust in banks”, explained 17.526% of the total
variance. It should be mentioned that questions E and H were not included in
either of the factors due to the fact that their scores were lower than 0.5,
which had been chosen as the minimum limit. Additionally, alpha Cronbach
test values were, for both factors (aF1=0.7801 and aF2=0.7228), above 0.70
that is suggested by Churchill26 to be the lower accepted limit, indicating the
existence of reliable scales.

Aiming to investigate the relationship of these two factors with respondents

demographics, one-way analysis of variance was performed showing that the
factors’ mean scores (m.s.) vary according to age, in that younger
respondents appear to be less positive towards insurers (m.s. 5,1) compared
to the older ones (m.s. 5,8) (F= 4.863, p=.008 <.05).

In addition, respondents with lower-medium levels of education are more

positive towards banks (m.s. 5,7) (F=8.591, p=.003 <.05) in contrast to
university graduates who seem to prefer the insurers (m.s. 5,6). Supporting
this finding, the results of the t-test analysis also showed that customers of
higher education have lower mean scores (m.s. 5,2) in relation to their
positive attitude towards banks (t=2.931, Asymp. Sig.=.003, <.05).

Moreover, higher income customers (more than €2.500) are more positive
towards banks (m.s. 5,5) in contrast to lower income customers (up to
€1000) who clearly prefer insurers (m.s. 5,7). The results of one-way analysis
of variance showed that participants of higher income are less positive
towards the insurers (m.s. 5,0) and support the above finding (F=3.784,
p=.023 <.05).

Besides, the performance of both t-tests (t=-2.611, Asymp.Sign.= .009 <.05)

and one-way analysis of variance (F= 6.815, p=.009 <.05) showed that men
are slightly less positive towards insurers (m.s. 5,3) than women (m.s. 5,7).

20
Finally, it should be also noted that, in relation to the usage rate, there is no
significant difference in the mean factor scores (F= .918, p=.4 >.05) between
respondents who already use different number of insurance products.

The above results, in contrast to the previous findings based on the mean
scores where respondents seemed to prefer insurers, give evidence that there
are certain segments of the market identified, based on demographic data,
that would prefer bank as their insurance providers.

Discussion

The main objective of this study was to identify whether or not there are
opportunities for banks in Greece to cross-sell insurance products through
their branch network. In addition, there was an effort to investigate the areas
of insurance product portfolio that could have a better potential to be sold by
banks, and to identify the profile of potential customers.

According to the research findings, consumers are used to insurance

products as 99.7% of the respondents use at least one insurance product.
The highest usage rates are for vehicle, health and life insurance products
(Table 2). This could be related to the fact that vehicle insurance is legally
compulsory and health and life insurance are usually offered by employers
especially in the private sector.

A great opportunity for banks comes from the fact that only 17.6% of
insurance users have already used their banks as insurance
providers. Of those customers, the majority belong to higher social classes,
are senior citizens and heavy users of insurance products (Table 3), probably
because they belong to the banks’ target market segments, so that they – as
a customer group - receive special attention.

This piece of research managed to identify particular reasons for customers

buying insurance from banks (Table 4) while confirming previous studies,
which have emphasised the role of trust, retail fees, personal
relationships and convenience in purchasing financial services (as in Black
et.al.5, Lee and Marlowe9). On the other hand, no evidence was found (Table

21
4) to support the general idea of perceived expertise as a prerequisite for
customers when purchasing insurance products (see McGoldrick and
Greenland15).

A barrier for the expansion of insurance selling via the bank branch network is
that, although almost all Greek banks offer insurance products, only 53.5%
of the respondents, mainly middle-aged, of higher income and education,
are aware of it (Table 6). Banks could improve their insurance sales
volumes by making customers aware of their offerings. On the other hand,
the low levels of awareness indicate that banks have the opportunity to
increase customer knowledge by promoting these products in a systematic
way, as the two main information sources for these customers (Table 5) were
brochures found within the bank branch and the bank employees; all the
while there are plenty of communication vehicles that could be used to raise
awareness.

The percentage of customers who are willing to buy an insurance

product from their bank is very high (85%) and this is one of the greatest
opportunities identified in this research. Besides, the paper managed to
specify the insurance programs that customers would be willing to buy from
their banks. In particular, research participants mentioned (Table 7) that they
are more willing to purchase vehicle, home and health insurance
from their bank. This finding gives direction to the bank management’s
efforts when prioritising the promotion of these categories of insurance
products. Additionally, the lack of knowledge about what unit link products
are, as well as the fact that customers have combined in their minds such
products with their insurance company, indicates a need for more information
provision, which it could also be considered as an opportunity for banks in
order to increase insurance sales volumes.

Despite the banks’ cross-selling opportunities already mentioned, it seems that

customers tend to prefer insurers than banks as providers of insurance
products. When comparing customers’ attitudes towards banks and insurers
(Table 8), insurers score higher in terms of service expertise, trust, and staff

22
competence. But, it is interesting that consumers state that they trust banks
more than insurance companies to cover all their financial needs.

Furthermore, certain market segments, which prefer banks to insurers as

insurance products providers, could be identified. The relationships between
customers’ attitudes, expressed as factors (Table 9) and customers’
demographics showed that age, gender, education and income do affect
customer attitudes and thus can be used as a basis for the formulation of
specific customer segments (as in Black et.al.5, Lee and Marlowe9, Boyd et al.
16
).

To sum up, one could conclude that opportunities do exist for banks to
cross-sell insurance programs. These opportunities are based on
customers’ high usage rate of insurance, the low penetration of banks to
insurance programs, and customers’ willingness to buy insurance from banks.
Moreover, the identification of specific insurance programs and certain
customer segments enhance the banks’ efforts to cross-sell insurance
programs.

Implications for managers

Considering the above findings, bank managers should try to exploit the
existing opportunities for cross selling insurance products through their
branch network, by designing a clear and effective marketing strategy aimed
at increasing awareness and some customers’ willingness to choose banks as
insurance providers.

According to this strategy, banks should place special emphasis on an

integrated communication plan that will be based on advertising,
public relations and direct marketing in order to inform their
customers about the provision of insurance services via their branch
network. Bank managers should exploit the fact that some customers prefer
banks in order to buy an insurance product, because they trust them and
because they think banks will offer them better financial terms. Promotion
should be aimed, at the first stage, at attracting younger customers with
lower-medium levels of education and higher incomes, who seem to be more

23
positive about choosing their bank as their insurance provider and, at the
second stage, the rest of their customers.

An important issue is that, as insurance sales require the active

involvement of employees, banks have to find ways to persuade their
employees of the importance of promoting insurance products and train them
on their particularities, so that they would feel confident to sell them. Extra
motives, such as those given from insurance companies to insurers will
probably bring more positive effects to sales. Motives should not necessarily
be financial ones. If banks communicate them to their branch managers as
important ones, then their sales could be related to the measurement of the
overall performance of the branch.

Finally, having in mind that according to customers’ attitudes they would

prefer a distributor because of its’ expertise in insurance products,
bancassurance products should be designed in a way that facilitates
understanding for both branch employees and customers. This may require
certain modifications to existing insurance products as well as IT support in
order to automate the whole sales process. It should be noted that banks
already take advantage of the fact that some insurance products come as
complementary to banking products such as car loan with vehicle insurance or
mortgage with home insurance. Still, the low penetration of banks to these
types of insurance shows that they should offer these combinations as
standardised products which, depending on the additional insurance services
provided, should have a different premium pricing.

Research Limitations

One limitation of this study comes from the fact that the field research was
conducted only in Athens. A more extended geographical sample might show
that in other areas of Greece, there is a difference in the use of insurance
products and in customer attitudes towards distribution channels, which
would differentiate the opportunities of banks for cross selling insurance
products.

24
As far as the sampling method is concerned, limitations relate to the different
types of errors inherent in surveys, such as the non-response error and the
inability or unwillingness of interviewees to respond.23,27 Moreover, although
descriptive research calls for probability sampling, non-probability sampling
was used; therefore, no assessment of sampling error was possible. 23,27

Further, the specific characteristics of the Greek financial services market,

which cannot be considered as a mature market compared to other E.U.
markets, generate concern. Thus, one must guard against generalisations.

Further research

Although this research study manages to address the issue of cross-selling

opportunities for banks in relation to insurance products, many unanswered
questions remain and relevant, interesting issues arise. The research findings
are useful, but due to the research limitations and, mainly, the lack of
previous research and evidence on the specific issue, future research in the
area of bank marketing is needed.

Due to the research sample limitations, it should be useful to analyse data

from a greater sample that would include both urban and rural areas and
compare the differences.

In addition, future studies should focus on the driving forces that encourage
consumers to buy an insurance product and their attitudes towards the
benefits they would gain from its use. More important, research on
bancassurance products and customer attitudes towards them should be
carried out.

Finally, branch employees’ attitudes towards insurance selling on one hand,

and insurance companies manager’s opinion on the banks’ role as distributors
of their products on the other, should be investigated in order to provide a
holistic view of the subject.

25
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