Commerce bank is one of the banks that is doing pretty well in the banking sector. This is evidenced by its high stock prices which has often been criticised that it is too high for the banking sector but since the bank considers itself as a retailer with several stores (bank branches), they think that their stocks are undervalued. Their retail policy is such successful that they can do anything to enhance this retail culture (such as offering coffee abs free snacks to customers, magazines and even a proposed entertainment coupled up with employees wearing costumes but only on Fridays).
This paper, simply a SWOT analysis, seeks to evaluate the strengths, weaknesses, opportunities and threats presented to the bank by the market followed by a few recommendations to that regard. Strengths Strong policy on customer satisfaction- Customer satisfaction is their top priority and they will do anything to make sure that they maintain and even expand their customer base. The bank has even embraces awards, commendations, compensation and intense training and education for their staff so as to achieve this goal.
Since this is a retail bank, customer satisfaction is everything: you fail to satisfy the customers then the customer base reduces due to account closures and this means doom for the bank. Luckily enough, Commerce bank is aware of this (Grantham & Carr, 2002). Retail channelling- Even when all other banks were pushing their customers to the low cost electronic channel, Commerce bank was offering the best for both and encouraging customers to use any channel they wanted even if it was both.
Other banks were giving monetary incentives and penalties in a bid to push customers to the low cost electronic channel. Aggressive promotion-More than $500,000 in promotion led to Commerce’s growth besides its capitalization in high potential areas such as the more than $500 billion worth of deposit New York City. Varied Products – Commerce offers a variety of check accounts to meet demand and thereby maintain the customer base. Low Deposit Rates – Lower than any bank.
In fact the rates were lower than all the other competitors such maintaining a high deposit base. Weaknesses Cost Effective Policy – Commerce has a poor cost effective policy which at times goes overboard thus affecting the very purpose of banking business; i. e. making money. As much as customers are necessary and gaining competitive advantage in the market is mandatory, cost to income logistics have to be considered. Unnecessary wastage or sacrifice need to be harnessed back to the company’s advantage. Opportunities
Differentiation – While all the other banks are competing on the 3% of customers who choose a bank due to high Interest rate, commerce decided to venture into the 62% who posted convenience and good service as their criteria for choosing a bank. Reinvesting in customers – Commerce believes in using their competitive advantage in getting stronger than in making money. For instance, when all other banks are charging $1. 5 at the ATM, Commerce decides to give that $1. 5 dollar back to their customers by charging nothing at their ATMs to boost the customer base by attracting more customers who will want top save the $1.
5 (Davidson et al, 2003). Positioning – Commerce’s ‘retail store’ in NYC which is a high potential area with $500 billion in deposits is a formidable opportunity for the bank Not Customers, Fans – High customer satisfaction can be achieved amid the loss of customers from other banks due to attrition. This has been proved by Commerce’s friendly treatment of their customers. Customers love you and that is enough for a bank to continue growing because they own loyal customers who identify personally not only with employees but with the corporate image of the ban
Threats No Deposit No Loan – This is a rather risky affair based on the income potential of loans. A higher percentage of incomes for banks come from interests charged on loans. Provided there is proven ability of repayment, then the customer should be given a loan even if he doesn’t operate any account at Commerce. Customer Entertainment – This is a rather overambitious ‘retailment’ of the banking sector and it has a potential of impeding not only the corporate image of the bank but also confidence stemming from the employees wearing costumes.
Customers come to banking hall when tired or in hurry and outright entertainment may no be necessary. The newspapers and hot dogs have worked enough ‘Wowoing’ the customers and restraint is necessary to avoid counter results from over ‘retailment’ of the banking process References Davidson et al, 2003: Offensive Marketing: An Action Guide to Gaining Competitive Advantage Elsevier Butterworth-Heinemann, p175 Grantham C & Carr J, 2002, Consumer Evolution: Nine Effective Strategies for Driving Business Growth, John Wiley and Sons, pp63-5