Who Is Now Number One in the Banking Industry?

As a Washington Mutual (WM) account holder, my greatest concern about WaMu’s viability became a reality a week ago Friday. WaMu, known for its breezy “WhooHoo!” advertising and bright colors, was no more, and now I am officially an account holder at JP Morgan Chase (JPM). I immediately logged onto wamu.com to see what information Chase was providing for potentially nervous WaMu customers (this would have been prior to reading the Q&A guide posted on the FDIC’s website) and I noticed a bit of a quick fix update of the homepage.

I totally get that Chase probably didn’t have a ton of time to work on the homepage redesign, so this is not meant to be a criticism. After all, the message is loud and clear, although some WaMu customers may feel a little like their financial future is a bit blurry like the little boy in the graphic.

Then a second, even more surprising blow hit this week with the acquisition of Wachovia (WB) first by Citi (C) and then by Wells Fargo (WFC). This made me think that with all the acquisitions happening, maybe Bank of America (BAC) would have to give up its #1 spot online to either Chase or Wells Fargo? And, from an online perspective, is this acquisition a good move for Chase and Wells Fargo?

Below was the online landscape among these competitors just 10 days ago. Prior to the acquisition, in terms of the number of active online account managers*, the rankings among top competitors in August were:

1. Bank of America with approximately 18.5M active online account managers
2. Chase with approximately 15.9M active online account managers
3. Citi with approximately 11M active online account managers
4. Wells Fargo with approximately 9.7 active online account managers

In August, Bank of America had the largest share at 25%, followed by Chase with 21%, Citi with 14%, and Wells Fargo with 13% among the top 10 competitors. Both WaMu and Wachovia had a much smaller share of 7% each.

*Active online account managers have logged into an online checking, savings, credit card, or mortgage account at least once per month.

Post-acquisition, Chase now takes the top spot with 28% share of active online account managers outpacing Bank of America by 3% points.

However, looking closer at both Chase's and WaMu’s online account manager base, there may be less opportunity due to overlapping customers. For example, a customer who may hold two accounts, one at WaMu and one at Chase, may consolidate their finances with Chase. In August, about 4% of WaMu’s online accounts were already  Chase customers, which means that although Chase is still #1 it is by a slimmer margin if you take into account these overlapping customers. There is a 1%overlap for Wachovia customers who bank with Wells Fargo.

** Deducts over lapping online active account managers for Chase/WaMu and Wells Fargo/Wachovia

It should be interesting to see if WaMu and Wachovia customers, especially those who have not been Chase or Wells Fargo customers previously, flee to a competitor. One thing  for sure is that both Chase and Wells Fargo need to engage with its newly acquired customer base early and often if they want to retain their business.

Comments

[dixie:]

JPM will earn goodwill when they decide to make Washington Mutual's shareholders part of the, "family."

There is a belief in the market Chase "stole", WM's assets with the assistance of the FDIC in order to painlessly bolster their own capital position.

2008 Oct 04 07:32 PM

[Ishortyou:]

Now that the 'bail out' plan came through, Wachovia needs fast to take advantage of it, it needs to sell its toxic loan portafolio from its banking subsidiaries around 122 billion if not more to the government close to even cost prices and take serious advantage of the tax break plan and remediate their banking book of business. They also need to contact their customers that did the run on the bank like chickens without head to bring their deposits back and reassure them that they are ok and there is not reason to panic because of the talking heads of FOX news and rest of media and the incompetence of the FDIC. This strategy will demonstrate to the public that the current 'bail out' plan is working and that Wachovia is the first product of it.

2008 Oct 04 08:45 PM

[DING-EE:]

In section 101,the very last subsection it is written
(e) PREVENTING UNJUST ENRICHMENT.—In making
purchases under the authority of this Act, the Secretary
shall take such steps as may be necessary to prevent
unjust enrichment of financial institutions participating in
a program established under this section, including by
preventing the sale of a troubled asset to the Secretary at
a higher price than what the seller paid to purchase the
asset. This subsection does not apply to troubled assets
acquired in a merger or acquisition, or a purchase of as
sets from a financial institution in conservatorship or
receivership, or that has initiated bankruptcy proceedings
under title 11, United States Code.
Let the "unjust enrichment" begin.
sincerely,X

2008 Oct 05 07:14 AM

[hunter:]

The best thing for the banking public may be for Wachovia to remain independent. If Wachovia is bought competition will lessen and that will be bad for the consumer. I too hope Wachovia will take advantage of the rescue bill and the relaxation of mark to market accounting rules. Wachvovia has a very profitable retail bank and their customer satisfaction reviews are among the highest in the industry. With the rescue package passed Wachovia can overcome its mtg woes and earn itself out of this mess. If Wachovia employees truly care about their company they should do what airline industry employees have done and take pay cuts to ensure their future. Wachovia's Sr MGRs should take the lead in salary cuts and take back ownership and make their company great again.

2008 Oct 05 09:01 AM

[Wachovian:]

Hunter, Really a great idea. How do we start? I am sure there enough employees that would love to see Wachovia surviving. We need some co-ordinated effort to prove that Wachovia can survive. Let's do something.

On Oct 05 09:01 AM hunter wrote:

> The best thing for the banking public may be for Wachovia to remain
> independent. If Wachovia is bought competition will lessen and that
> will be bad for the consumer. I too hope Wachovia will take advantage
> of the rescue bill and the relaxation of mark to market accounting
> rules. Wachvovia has a very profitable retail bank and their customer
> satisfaction reviews are among the highest in the industry. With
> the rescue package passed Wachovia can overcome its mtg woes and
> earn itself out of this mess. If Wachovia employees truly care about
> their company they should do what airline industry employees have
> done and take pay cuts to ensure their future. Wachovia's Sr MGRs
> should take the lead in salary cuts and take back ownership and make
> their company great again.

2008 Oct 05 09:09 AM

[cocomurph:]

How do the numbers look when it comes to total deposits? Share of online mangers in just part of the story.

2008 Oct 05 01:50 PM

[lepso:]

What have these Bank Presidents been smoking in the last 10 years? Don't the know, that what goes up must come down? I am so disappointed in them. These are our finest andf most trustworthy and they have been letting us Americans down. Charging interests that can not be sustained by the loan holders in case of a stick in the road. They are obligated to make sure, that the future will be good for such borrowers that do not understand the system as the should. Shame, shame. Now we are all in a fix.

2008 Oct 05 03:46 PM

[nyka:]

mURPHMAN...WHAT'S A MANGER???????

2008 Oct 06 01:13 AM

[jrs87sch:]

You can't simply blame the Presidents and Execs of these fallen companies. Many of them didn't know or understand the investments their subordinates had taken on.

The complexity of these assets are so deep that they can't even put a value on the securities, nor do they know what all the security represents.

Complexity makes companies easier to fail, the vast webs they create can be at the expense of their own demise.

2008 Oct 06 01:28 AM