ALEXANDRIA, VA (Mar. 27, 1998) -- This week, we continued with our look at "What is a Bank?" On Monday, we looked at the defining characteristic of a bank as a depository institution. Federal deposit insurance once gave banks and savings & loans a marketing advantage and a cheap source of funds. The rise of money markets in the 1970s, though, took a serious whack at the age-old function of the bank as a depository institution and commercial lender.
Disintermediation of the process of lending and borrowing is still in progress. In other words, traditional banking relationships are still in a process of fragmentation. That is a theme that will run throughout our multi-month look at the financial services industry.
On Tuesday and Wednesday, we started to look at banks as consumer product companies. The relationship between a bank and its commercial and consumer customers is such that there are numerous opportunities each year for a bank to reinforce the positive or negative feelings a customer has for the brand.
Most Americans send off thousands or tens of thousands of dollars each year to their financial services providers, either for mortgage or other debt payments or for investing purposes. The relationship chain that forms can lead to increased earnings power for the companies that successfully take advantage of their position as providers of vital consumer services.
On Thursday, we took a look at wholesale banks. This is the side of a bank that consumers don't really see. We looked at the higher margin, higher turnover services that differentiate the financial performance of a bank from plain-vanilla lenders. This is another theme that will continue to run though our look at the banking and financial services sectors.
Next week, we'll continue with some more basic concepts of "What is a Bank?", but we'll work our way into looking at a bank's income statement by Wednesday, at the latest. I hope you'll be able to join me.
Now here's Jeff with some DRIP housekeeping items.
Campbell Update: This week we received our confirmation of intent to purchase Campbell Soup (NYSE: CPB) from The Moneypaper. If you're also buying Campbell through The Moneypaper and you received the same notice, you needn't do anything unless your name, social security number, or address are incorrect on the order form. If they're all correct, kick back and eat some Goldfish. You're on your way to Campbell Soup, Pepperidge Farm, and Godiva heaven. Campbell doesn't require the W-9 filing, so don't be fooled by all of the yellow highlights on the Moneypaper page. You needn't do anything if your name and information are correct.
Have a great weekend!