Introduction of Nexity3
A.Industry and Demand Analysis3
A. Resources View Analysis.9
B.Value chain analysis10
III.Nexity Financial analysis12
A. Nexity bank business model and strategies.12
B.Nexity Financial Analysis.13
Introduction of Nexity
Nexity is an online bank, which was initially called the People State of Grand and it was opened in February 2000. Its headquarters are located in Birmingham, Alabama, USA. Currently, David Long is the President of Nexity and Greg Lee the CEO. The turnover represented an amount of $13,018 millions in 2003. Banking online is a very good opportunity for the banking industry, there was a projection of 67 million of American using it by 2007 compared to 38 millions by 2003.There were a lot of players in this competitive market but Nexity had a generic strategy of differentiation by spreading its geographic and demographic customer base throughout the US.
Industry and Demand Analysis
Historically, there was a rebound of the banking industry and rapid growth in this area after the Great Depression and World War II, with the hope to keep the industry from being highly concentrated. Indeed, the US banking industry was a fragmented and dispersed system but it changed in the 1980’s. These changes were due to financial legislation which wanted to lead to a more integrated financial system in US in terms of activities and products
The deregulation led to consolidation and consequently to new rivalry. Helped by the Gramm Leach Bliley’s Act offering extended banking but also by the changes in communication and information technologies, the US banking industry knew a merger mania and a lot of acquisitions were done. All had the same goal : to develop a more national brand recognition in a market newly concentrated. But scandals also appeared due to these new changes.
Concerning the size of the industry, it is obvious that the concentration could be seen between 1980 and 2002. Number of institutions declined from 14,434 to 7,887 contrary to their branches which raised a lot from 38,738 to 66,185.
However it is important to make the distinction here between two types of banks. At first, there were the brick-and-mortar banks and then appeared the virtual ones, such as Nexity. Now, let’s compare Nexity in the US virtual banking environment by a review of the main actors performances in 2002.
|Institution |Assets (in thousands) |Deposits (in thousands) | |E*Trade Bank |$17,453,676 |$9,157,328 | |ING Direct |16,142,091 |13,112,826 | |NetBank |4,280,899 |2,479,421 | |Principal Bank |1,967,342 |1,826,018 | |BMW Bank of North America |1,149,732 |156,983 | |National Interbank |645,448 |528,516 | |Nexity Bank |501,167 |368,523 | |American Bank |472,181 |336,288 |
Here we can see that Nexity is the 7th virtual bank on the market in terms of assets. More important, we also notice that E*Trade Bank and ING Direct are the first and second ones, with a huge gap separating them from the others, among which competition is really hard.