Market Trends Affecting Bankatlantic

Market Trends Affecting BankAtlantic (BA)

Market Structure

Current market structure for BA holds true to the current lag in the economy. BA’s future as a bank is not at risk, nor is it in jeopardy at this time; however, there are some significant changes that are certain to be industry wide. Many financial institutions are under scrutiny from effects of the mortgage meltdown due to predatory lending BA managed to stay a full step ahead of the competition by avoiding involvement in lackadaisical underwriting guidelines. BA has stood strong with their standards and as a result is able to avoid a significant amount of loss, therefore; BA is able to move forward with minor threat in relation to its competition.

Present strategy at BA is to concentrate on what can be controlled, in a meeting dated 01/07/08 the 2008 goals for BA were identified as retention of deposits, and monitoring behaviors. BA associates are normally held to higher standards in terms of customer service, under the new level of expectations there is a demand to raise the bar in order to maintain customer loyalty. Although BA cannot control the economy there are certain measures that ensure BA can control the way their team handles customers.

Impact of New Companies Entering the Market

New companies entering the market place are doing so under extreme circumstances. In todays market there are many uncertainties regarding financial institutions and is more than likely not a very good idea to open a bank in order to make money. Although this is true there are still new banks opening and joining in on the competition. A new bank will normally begin with a campaign to raise capitol in order to turnaround and lend it out for a higher interest rate (www.thesimpledollar.com, 2007). The method to this campaign is to invite prospective customers into the bank by giving high introductory interest rates in order to gain deposits. This particular practice is something that BA is not interested in doing. BA prefers to win customers and future customers by gaining their loyalty; this is done by having a higher standard for associates to live up to.

Prices

Technology

Productivity

Cost Structure: Wages and Benefits

Cost Structure: Fixed and Variable Costs

Price Elasticity of Demand

The current market conditions can prove to have an impact on the price elasticity of demand by affecting the banking customer’s needs in relations to prices and rates in the banking industry (J. LoBuono, personal communication, January 5, 2008). The level in which a demand or supply curve responds to an adjustment in banking prices and rates is considered the curve's elasticity. The elasticity will differ for various banking products because certain products may be more important to one customer than it is to another. Banking products such as checking accounts are usually necessary for the average customer and are not sensitive to price changes. Customers typically need a checking account regardless of a price increase. On the other hand an increase in price for a product or service that is not essential, e.g. such as a safety deposit box, will discourage certain customers to purchase the product if the price becomes too costly (Investopedia, Economics Basics: Elasticity 2008).

Competitors

An interesting thought might be to imagine a world without banks, but banks have become the pillars of our financial system. “They transfer risk, provide liquidity, facilitate both major and minor transactions, and provide financial information for both individuals and businesses” (Investopedia, The Industry Handbook 2008). According to Investopedia, in North America there are two types of banks. The first is Regional Banks which usually provide lending and depository services to the community. The second is the Major Banks which has local branches, but their main focus is participating on international, underwriting, etc. in financial centers such as New York City.

BA has set a trend for being Florida’s Most Convenient Bank. With over 90 branches in Florida with focus in the Miami and Tampa locale, BA still continues to grow. Open seven days a week, BA offers a customer service center 24-hours a day, with free checking, online banking and extended hours for customers. Although this trend may appeal too many, there are clients who may not follow this market trend and remain loyal to the bank that has served them in the past. Large corporations usually do not follow trends and they too may remain loyal to the banking institution