ANZ has the most successful product penetration strategy in the business banking market of the major banks, according to research prepared jointly by Macquarie Securities and East & Partners.The premise of the research is that in a low-growth environment the best way for banks to improve profitability is to build on existing relationships through cross-selling.In the institutional market, ANZ sells an average of 11.4 products per customer, compared with 8.7 for Commonwealth Bank, 6.8 for Westpac and 6.7 for National Australia Bank.In the middle market, ANZ sells an average of 5.8 products per customer, compared with 5.2 for Commonwealth Bank, five for Westpac and four for NAB.And, in the small and medium enterprise segment, ANZ sells an average of 3.1 products per customer, compared with 3.8 for Westpac, 3.1 for NAB and 2.4 for Commonwealth Bank.Macquarie's view is that ANZ and NAB are the best placed to improve their position in business banking. It has upgraded ANZ's earnings outlook, and has both NAB and ANZ as its top stock picks in the banking sector.The report said ANZ's strategy in the institutional market has often been to use price as the main differentiating feature for products. This has seen the bank deliver lower than average revenue per product than its peers but better scale benefits, leading to lower costs per product.In the middle market and SME segment, ANZ has the highest level of revenue per product.ANZ's weakness is that it has the highest rate of customer churn, with large customers being the most likely to change banks.Commonwealth Bank has the second largest middle market and SME customer base, but CBA's cross-sell into this base has lagged behind its peers.NAB is "subscale" in institutional banking, East and Macquarie conclude, which has led to the bank being high cost on a per product basis.NAB is the dominant player in the middle market and in SME banking, and it is best in class in terms of revenue per product. NAB has strong client relationships, which allows it to charge a premium. Its cost per product shows good scale in the middle market and SME segments.The report said NAB could have done more to capitalise on these strong relationships with more cross-sell. It has the most to gain from increased cross-sell, if it could execute such a strategy.Westpac leads its peers in institutional profitability. It is very strong in transaction banking services, debt markets and advisory.In the middle market and SME segment, Westpac is best in class for products per customer, but bottom of the class for revenue.The report said Westpac needed to invest more in the business to improve profitability.