Capturing Share When The Market is Consolidating

PNC buying Nat City, Wells Fargo acquiring Wachovia, J.P. Morgan Chase landing WAMU – winners are emerging, but it is also a unique opportunity for the rest of the industry to profit. Ironically, most banks will fail to capitalize on what may be their best chance to grab profitable market share.

Here are some thoughts — which we recently discussed at the Bank Administration Institute’s (BAI’s)Retail Banking Community.

Too many bankers make the mistake of assuming that these mergers like these automatically create disruption that leads to a significant number customers being in play . Perhaps that happened in the past, but Wells Fargo, Chase and PNC have become expert at smoothly integrating acquired banks. They will take their time these are not premium priced deals where the costs need to be wrung out quickly. They will court the most profitable customers at the acquired bank with detailed retention strategies. As an example, Chase has already indicated it will take its time in merging WAMU branches in order to minimize customer disruption.

How can you take advantage of this unique opportunity?

• Understand their strategy and develop your own. Between published reports and market shopping studies we can determine the competition’s most likely product, pricing, marketing and sales management strategies. Know what they’ll do, and develop a detailed plan in response.
• Target the customers you want to acquire. It is possible to identify nearly all of a competitors commercial loan and high value retail customers. Create a target list of the one’s most important to you. Back it up with detailed sales and marketing plans.
• Develop an action plan and manage to it. Strategies and plans are worthless if not executed with precision. Apply the same diligence in executing your plan that that the competition is applying to its merger planning.
• Be aware of timing. Opportunity will be greatest around certain predictable events: systems conversion, product changes, and personnel changes. Act too early and nothing has changed for customers they won’t feel the impact. Wait too long and all the changes have been absorbed there is no motivation to move.

The most successful banks will proactively implement these 4 strategies to capitalize on merger related disruption. Those who don’t are taking the risk that competitors can streamline distribution, improve pricing, do a marketing re-launch and emerge even stronger.