Commerce Bank Case Essay Example
Commerce Bank
Executive Summary
Commerce bank has been a pioneer in the banking industry by reverting to customer service. This has driven customers to the bank, but in order to stay ahead on the curve they want to move away from the model that has worked for them. They should focus on the current model and enhance it, rather than change it.
Background
Commerce bank also known as Commerce Bancorp is a New Jersey based bank founded in 1973 by fast food restaurant franchiser Vernon Hill. Hill took his experience as a fast food business owner and used it to operate Commerce bank. “The world”, he reasoned, “did not need another ’me-too’ bank” (Frei, 2006, p.4.)
Hill created a retail franchise with branches openening earlier than the competitors and staying open later than the competitors, 7:30AM to 8:00PM during the week and modified hours on Saturday and even Sunday (Frei, 2006, p.4). Drive through windows at some busier locations even stayed open till midnight to accommodate customers, however all branches operated un the notian that they were to open 10 minutes before and close ten minutes after the posted time, calling it the “ten-minute rule” (Frei, 2006, p.4.).
Commerce used this model to get customers in the door and made their primary focus customer service. This focus allowed them to increase customer deposits, by an average of 30% per year from 1996 to 2001, some years they even achieved growth rates in excess of 40%. This was not consistent with the market trend during this period. Other banks where opting for internet banking, literally pushing customers out the door. Hill felt that this was a model for failure, because “You can’t name one retailer in this country that has pushed people where they don’t want to go and succeeded” (Frei, 2006, p.4.).
Currently Commerce is feeling the pressure from other banks, who wants to use their business model to draw new customers. Washington Mutual for instance launched “un-bank”, with
Executive Summary
Commerce bank has been a pioneer in the banking industry by reverting to customer service. This has driven customers to the bank, but in order to stay ahead on the curve they want to move away from the model that has worked for them. They should focus on the current model and enhance it, rather than change it.
Background
Commerce bank also known as Commerce Bancorp is a New Jersey based bank founded in 1973 by fast food restaurant franchiser Vernon Hill. Hill took his experience as a fast food business owner and used it to operate Commerce bank. “The world”, he reasoned, “did not need another ’me-too’ bank” (Frei, 2006, p.4.)
Hill created a retail franchise with branches openening earlier than the competitors and staying open later than the competitors, 7:30AM to 8:00PM during the week and modified hours on Saturday and even Sunday (Frei, 2006, p.4). Drive through windows at some busier locations even stayed open till midnight to accommodate customers, however all branches operated un the notian that they were to open 10 minutes before and close ten minutes after the posted time, calling it the “ten-minute rule” (Frei, 2006, p.4.).
Commerce used this model to get customers in the door and made their primary focus customer service. This focus allowed them to increase customer deposits, by an average of 30% per year from 1996 to 2001, some years they even achieved growth rates in excess of 40%. This was not consistent with the market trend during this period. Other banks where opting for internet banking, literally pushing customers out the door. Hill felt that this was a model for failure, because “You can’t name one retailer in this country that has pushed people where they don’t want to go and succeeded” (Frei, 2006, p.4.).
Currently Commerce is feeling the pressure from other banks, who wants to use their business model to draw new customers. Washington Mutual for instance launched “un-bank”, with