WaMu Case Study
What industry is this company a part of? How is the industry changing? Washington Mutual is a part of the financial services industry. Its primary function is a bank however it has a significant mortgage servicing and mortgage origination component. The industry leaders were investing money in ATM and online channels to steer customers out of their branches. They deemphasized the retail banking business to chase the potentially higher profit margin businesses like underwriting and wealth management.
What characteristics of this industry have an impact on this company’s strategy? How do this company’s choices impact the industry at large?
The industry typically did not hold thrift banks in a high regard. The big banks such as Bank of America and Citigroup usually set the standard and led the charge for the industry.
Washington Mutual’s strategy to exponentially grow and target an underserved segment of the market challenged the industry’s perspective of the thrift bank. In addition, the industry has taken notice that WaMU has been successful at targeting and serving the under-banked market segment.
What is this company’s strategy in terms of cost, differentiation, and growth?
Washington Mutual’s strategy was to grow and transform the company from a West Coast power into a national network with branches in all of the major metropolitan areas. It outsourced the insurance and mutual funds business to keep overhead low. In addition, he acquired banks to fuel the rapid growth. Killinger and his team picked cost appropriate acquisition targets that would make them the market leader and targeted urban areas with high customer dissatisfaction rates. This growth was supported by offering free checking and free ATM offers. They used technology to automate the mortgage underwriting process and quickly integrated newly acquired technology into the larger organization. For example, they knew they could attract homebuyers...
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