American Commercial Banking Industry’s Analysis


Banking industry provides financial products and services to wide range of customers such as; individuals, SMEs, institutional investors as well as corporations within international market. Bank of America is one of the biggest banks in United States banking industry owing to its asset base, especially after acquisition of Merill Lynch & Company. Bank of America provides retail banking, corporate and investment banking services. The company became one of the largest in the world due to market capitalization and earnings (Engler and James).

Brief History of the Industry

There has been tremendous change in banking system through the years. This is revealed by wider range of services and product portfolio currently offered by banks. Nature of deliveries haschanged over time due to technological innovations. However, central role of banks within communities have not changed since they still make use of community’s surplus funds through lending and various investment projects. Banking industry provides citizens with first choice for saving, investment opportunities and borrowing. First banks operated between the years 1791 and 1832, where lending was done cautiously. However,smooth banking operations were interrupted by banking crisis which occurred between 1929 and 1933. Revolution on banking system began in 1970s till to-date being drivenby evolution of technology transforming ways through which banking services are remitted (Engler and James).

Brief introduction on the use of information technology in the industry

Technology enabled use of telephone banking, use of credit and debit cards and use of automatic teller machines. Currently, there is use of computer technology in “examining and controlling risks within the complex world of financial services” (American Bankers Association 1). Banking technology involves use of sophisticated IT services facilitating reliable, secure and efficient customer services. This enabled solving of various transactional problems and at the same time assisted banks in achieving business objectives through modern marketing initiatives.

Disruptive technologies

One of the major disruptive technologies or innovation in banks has been credit scoring. This calls for reduction in use of credit cards within United States market as well as internationally. However, adoption of Near-Field Communication (NFC) technology provides solution to current credit scoring problems as perceived by most institutions (American Bankers Association 1).

Key players in the industry by market share

Key players in the banking industry include; Bank of America, Citigroup Inc., JP Morgan and Wells Fargo. Statistics in 2011 recordedBank of America as one of the banks with the biggest market share in the United States followed byWells Fargo, JPMorgan Chase, Citibank then US Bank, PNC Bank, TD Bank, then Sun Trust in that order (American Bankers Association 1).

Competitive forces analysis of the industry

Clients within banking industry have limited bargaining power. On the part of suppliers, banks usually have three suppliers of products which include; its depositors, credit market and central bank. Depositors basically have no bargaining power, at the same time credit market being the source of money can be considered infinite since its open to all qualified clients. Central bank on the other hand acts as source of liquidity to banking system taking processes at reasonable costs. Banking industry is considered to have no threat of substitute products since there are no real threats on formation of new banks (American Bankers Association 1).

Generic strategies of the top key players in the industry including Strengths and weaknesses of each strategy for each key player

Bank of Americapositions itself in the market as Bank of Opportunity making them to easily weather economic storms. The bank manages many ATM services alongside offering online accessibility as well as cash back rewards. At the same time, Bank of America operates largest investment in advertisement making it market leader capable of protecting its current customer base (American Bankers Association 1).

JP Morgan Chase uses its slogan strategy “Chase what Matters” to attract more urban and consumers in the upper-market. However, the message does little in targeting emotional intensity of consumers besides a reflection of what they desire to influence. The Bank has decided to keep its message consistent for the purposes of avoiding unnecessary exposure to risks. The bank offers what matters to consumers in form of convenience, online tools, and ATMs as well as cash back cards.

Wells Fargo’s strategy targeted process of keeping consistent message within the market. However, their focus has been on conversion and integration of their new acquisition, ‘Wachovia’. Their advertising theme “Together We’ll Go Far” focuses mostly on the company’s acquisition while doing little in connection with consumers(“Business Continuity Planning for Banking andFinance” par 1).

Future opportunities and trends for IT Use in the Industry

Research reveals that Commercial Banking industry is one of the highly competitive industries. This calls for banks to upgrade their strategies in achieving costs on savings and at the same time maintaining customer satisfaction through business retention. Such trend provides market for extensive use of ATM network capable of servicing customers within convenient bases. Banks are required to invest much in IT and communication infrastructure for the purposes of remaining relevant within todays dynamic environment(Engler and James).

Works Cited

American Bankers Association.Report of the Market Share Task Force, United States, WashingtonDC: John Wiley Publishers, 1994. Print.

Business Continuity Planning for Banking and Finance 2007. Web.

Engler, Henry, and J. Essinger.The future of banking, United Kingdom, London: Pearson Education, 2000. Print.

Find out your order's cost