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Case Study Republic National Bank of Dallas

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Case Study: Republic National Bank of Dallas (NOW Accounts)

Strategic Issues and Problems-

Ruth Krusen, the marketing officer for the Republic National Bank f Dallas, was asked to assess the impact on Republic Bank of offering NOW (negotiable order of withdrawal accounts) if they became legal nationwide. Her objectives are to 1) determine the impact on profits that Republic Nation Bank could anticipate from NOW Accounts, and 2) Recommend a NOW account marketing strategy. One of the concerns is that it is not clear how Dallas banks and thrifts would react to NOW accts, so they plan to investigate the New England banks currently offering the NOW accounts to individuals and to non-profit organizations. Although this information would be useful, it is still unclear to how the Dallas-area banks and thrift institutions would react. Another concern is that Ruth Krusen needs a back-up marketing plan in case NOW accts were not approved by management. The ultimate decisions would be to either offer NOWs with conditions, offer NOWs with no conditions or to not offer them at all. If they do consider NOWs, they must consider the 4 P's (price, product, promotion and place) and if they do not consider NOWs, how would they keep their dominant competitive position given that NOWs are an environmental threat?

Develop standards for choosing between alternatives

From the New England case-

Three scenarios possible in the Dallas Market-

1. Not offer NOWs-

a. No-win possibility exists for all the different financial institutions. Banks will have to pay interest on previously interest-free funds, and S&L's and credit unions will incur costs no previously encountered.

b. Presently money market rates are low, suggesting little spread to make adequate profit margin.

2. Offer NOWs with no conditions-No minimum balance, service charges, 5% interest, an active promotion/communication program


3. Offer NOWs with conditions-Some form of minimum service charges, less than 5% interest, little promotion/communication


Despite the resistance of commercial banks in Massachusetts and the New Hampshire to offering NOWs, it is shown that a substantial majority are now providing them.

Competitiveness of financial institutions is directly related to the degree to which the state's population is concentrated in large urban markets.

4. After 4 years these figures were developed after the NOW introduction: 72% of checking account balances in NW have been converted to NOWs and 44% have been converted in Massachusetts.

5. Regulatory



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