The Macro Environment
Revenue within the Texas banking unit is generated primarily from the pockets of urban and commercial growth. Demographic and economic factors have caused a dramatic increase in banking activity. This is due in large to a population growth and increases in the economy in the state of Texas, generally life in Dallas is progressive and prosperous.
Anticipated changes in the Political-Legal environment have the potential to transform the banking industry. Due to an attempt by a Thrift Institution to circumvent the prohibition of offering chequing accounts in the state of Massachusetts, there is a possibility that NOW accounts could be introduced in the state of Texas, in an effort to prevent future condensation of the rate at which commercial banks lose their customers.
The Micro Environment
Republic National Bank marketing strategies have historically been targeted towards the retail market. They have taken the position of “taking chances on the little guy and community service” which has resulted in them being one of the largest retail account bases in the Dallas area.
One of the more dynamic aspects of the Republic National Bank’s microenvironment is its competitive environment. There is intense competition within the banking industry where banks are repackaging customer services and introducing new services in an attempt to maintain and gain market share. There are a total of 1,360 banks within the state of Texas of which 250 are owned by Holding companies. These banks together hold 55% of the states total bank deposit. In Dallas, First International Bancshares was the leading holding company followed by Republic of Texas Corporation being the second largest in terms of total assets. Additional banking institutions consist of thrift institutions such as Mutual savings banks, as well as cooperative banks, saving and loans associations and credit unions.
Commercial Banks –
Republic National Bank is the market leader with its closest competitors being First National Bank and Mercantile National Bank. Combined they account for approximately 78% of total bank deposits in the city of Dallas and 71% of Dallas County bank deposits. Republic National Bank deposits totaled approximately $4.6 billion, second was First National Bank with $4.4 billon and third Mercantile National Bank with $1.3 billon in deposits at the end of 1976. It is notable that these market leaders were located within walking distance of each other in the downtown area. Unlike Savings Associations, the law limits Commercial Banks to:
Only allow 5% on savings accounts
Only have a single location in Texas
These institutions were not permitted to accept demand deposits, chequing accounts or offer commercial loans. This however all changed when in 1977 a bill was introduced into Congress allowing both Commercial Banks and Thrifts in fifty states to offer Negotiable Order of Withdrawal (NOW) accounts.
Savings & Loans Associations –
Dallas Federal Savings is the largest savings and loans association, with approximately $909.6 million in deposits (32% of total deposits). Texas Federal Savings and First Texas savings together accounted for approximately $992 million (35% of total deposits). Savings and loans associations operated approximately 150 offices in Dallas County and those which were based outside Dallas County, operated about 50 offices in the county. Saving and Loans Associations have competed robustly for passbook saving accounts, historically they have attracted older customers, however they have devised a marketing strategy (market penetration) where they engage in cross-selling by providing installment loans to younger customers in hopes of converting them to open passbook savings account. The Savings Association has emphasized two competitive advantages over Commercial Banks:
They could pay 5 ¼ % on savings...
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