Valley National Bank’s Business Strategy

This section of the Group Six report discusses VNB’s business strategy.  Here we will discuss how Valley uses their MIS to compete with other banks.

Valley National Bank was started over 80 years. The main thing that banks face in today’s age is the rapid change of technology and who can facilitate information for the customers faster. With competitors such as TD, Chase, Wells Fargo, and PNC, VNB faces obstacles that only a boost of technology will help to overcome their barriers.

VNB ANALYSIS

The Bargaining Power of the Customer is not very high for VNB. Since there is nothing being purchased, there is not much room for negotiation.  If there is any bargaining power at all for the customer it would be to negotiate rates for certain products or the amount of money that they can maintain in an account.

Valley faces low threats of substitutions. There are things such as credit unions or saving banks, but over all they settle over the same category, banking. They also do not face bargaining powers of suppliers since they are the ones providing the supplies. The essential things that they use are things that help run the everyday branch such as paper, electricity, and other things.

VNB along with other banks face low threats to new entrants. Opening a bank or beginning a new bank is not something that just any one can one day decide to do. Banks go through rigorous qualifications to be an established bank backed by the Federal Reserve. Extensive auditing and many policies and procedures must be established before a bank can be opened.

Rivalry is something that is faced on a daily basis in the banking industry.  Not only are there big banks that use their names to pull in customers, but there are also small community banks that work hard to outdo what the big banks miss out on. With competitive products that are almost identical from bank to bank, VNB tries to differentiate them from the competition.  VNB offers a $499 refinancing product, which no other bank has been able to match, as their way of setting themselves from the competition. They strive for excellent customer service and offer free services such as free checking accounts, online banking, and free bill payment.

Valley National Bank uses a focus differentiation approach for their competitive strategies. VNB focuses on bringing in their customers using the refinancing program that no other bank can offer them and by providing impeccable customer service. They also use promotional checking accounts that require only a minimum balance of $99 to avoid service fees. Many bigger banks require higher balances to avoid these fees which are a big advantage for Valley.

Valley also offers a program called Perfect Switch. This program helps customers easily transition from one bank to another. Many people might not be satisfied with their current bank but because it takes time to change from bank to bank, they are reluctant to do so. Valley’s Perfect Switch helps to facilitate this for its customers. Things such as direct deposit or any bill that might be automatically withdrawn from your account are transferred from your old bank to your new Valley account. You simply provide the information and let Valley do the rest.

Some business processes that VNB uses to acquire more customers are detailed customer service. When customers come in for refinancing options, VNB employees recommend the potential customer to also open a Free Checking account as to facilitate their payments for their mortgages. Valley makes follow up calls and issues letters of gratitude to their customers for their loyalty and for banking with them.

Valley provides a product and a process implementation information system to provide competitive advantages. The product that they use to get their customers into the bank is the refinancing option of $499. They also use their money bank checking account as a product to get customers to open new accounts by rewarding them. The process implementation comes into play by helping the customer to find anything else they are looking for. They make it harder for the customer to leave the bank by offering and accommodating them to the things that matter most to that customer.