Tuesday, May 02, 2006
Winning in the Network Era for WaMu
Financial Services is the largest industry in the world in terms of earning and market capitalization, accounting for 20.3% of the S & P Index; it is comprised of some of the most profitable companies in the world. While the industry is composed of hundreds of companies representing numerous sectors of financial services, the larger companies have historically grown through mergers and acquisitions, thus creating an extremely vertically integrated industry as depicted in the stack below:
Company Profile: Established in 1889, Washington Mutual plays in every layer of the stack. WaMu conducts its business operations through two divisions: Consumer and Commercial Group.
The Consumer Group offers products and services to consumers and is comprised of two business divisions:
Retail and Financial Services:
-Offers deposit and other banking products and services to consumers and middle market businesses
-Manages and services home equity and consumer loan portfolios
-Provides investment advisory and brokerage services with over 600 financial consultants
-Offers home loan products
-Offers insurance products to complement the mortgage loan process
The Commercial Group offers financing to developers, investors, mortgage bankers and homebuilders for acquisition or construction of multifamily dwellings, commercial properties and new homes. Additionally the Commercial Group originates, sells and services multi-family and other commercial real estate loans
WaMu is the 6th largest retail bank providing financial services for consumers and middle market businesses. Including its subsidiaries, "The Company" has a stong distribution channel with almost 2000 retail banking stores, 341 retail mortgage offices, 40 multi-family lending office and online banking. As the nation's leading multi-family lender, WaMu is also a top tier mortgage lender with a strong track record of credit risk management. (Source: www.datamonitor.com)
As the Network Era becomes more apparent in the financial services industry, the focus on Payment Processing is changing the competitive landscape:
While all financial service institutions are adjusting to the influences of technology and the Internet, WaMu has a history of being an early innovator. In 1962, WaMu installed the first advanced computer system in a bank on the west coast. In the 70's, WaMu established the first shared cash machine network in the nation and helped establish the first Pay-by-Phone telephone banking program.
WaMu has integrated online banking capabilities into their consumer and business divisions. Providing full banking functionality through the web includes accessing account information, performing virtual transactions and providing other banking services. As the Network Era will continue to influence the financial services industry in the future, WaMu must establish and maintain strategic relationships and alliances with new players in the stack for the transition towards emerging payment processing mechanisms.
Web Services/Software Development: Creating an integrated relationship with the players in this level are critical for WaMu, as direct client interaction with web services and software influence customer satisfaction. Applications which provide intuitive, efficient and user-friendly solutions must also serve a dual purpose of streamlining data integrity, data gathering and information processing operations. WaMu utilizes iPlanet software, a company resulting from the Sun Microsystems-Netscape alliance. iPlanet software provides Washington Mutual with an organizational and architectural model to connect its internal legacy systems with its many e-commerce initiatives.
IT Security: With the emergence of online banking, financial service institutions have had to extend their privacy and security capabilities. WaMu's enhanced online security, to protect and secure their customer's accounts with cutting edge technology, is achieved with eSphinx, a product from RSA Cyota Consumer Solutions, a division of RSA Security Inc. Maintaining a relationship with Cyota will ensure WaMu's different portfolio of customers and transactions have the strongest multi-facted authentication measures while providing minimal impact to the user experience.
Online Payment Processors: WaMu has recently extended its contract with First Data and STAR Network for providing authorization and payment processing. First Data and STAR's Internet commerce solutions are extending WaMu's online capabilities. While new, emerging players such as PayPal dominate the online payment processing space, WaMu is happy to sit back and let it's strategic partners compete.
In conclusion, WaMu has taken steps to sustain it's position in the competitive landscape of the financial services industry. Further, in the Network Era, the organization's commitment to strategic relationships in web services, software development, IT security and online payment processing will allow WaMu to compete in the online playing field.
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