Sizing up the competition: in the past, a competitive analysis consisted of looking over the other banks in your geographic market. Today, updated assessments need to include national institutions as well as Internet companies and nontraditional financial services providers.

• Author: Bernstal, Janet Bigham
• Position: Competitive Intelligence - Cover Story

Nicholas Vaglio has a lot of competition to analyze. As the vice president of marketing for Wachovia's commercial banking in a five-state area, he's working with the image of "the big bank with the hammer." Yet, his toughest competitors are actually the little banks who, besides being entrenched in the local community, "can afford to spend a 100 percent of their budget in their own neighborhood."

"Look in the newspapers weekly and you'll never see us," he explains. The community banks consistently use the weeklies, while the regional banks advertise in the major dailies. Neither one has to worry about getting advertising messages out to distant states.

Vaglio has watch over 100 communities in New Jersey, New York, Connecticut and Delaware. Among the competition, he numbers also the super-regional and financial institutions. And he's looking over his shoulder at the nontraditional finance companies, such as GMC and others.

"Merrill Lynch has been making a concerted effort to add on commercial relationship managers and is becoming a serious competitor," claims Vaglio. "On the small-business side, American Express has been hiring good folks away from commercial banks."

Despite Wachovia's considerable resources, Vaglio feels compelled to continually update his own competitive analysis. The bank's $410 billion in assets are spread over a thousand dynamically different communities, and "You'd need a small army to focus on all of Wachovia's competition."

As part of his analysis, Vaglio gathers both historical and empirical data, looking at patterns. The larger the bank, he says, the easier to get information, especially if it's public. He offers these tips about conducting a competitive analysis:

* Look at analyst and management presentations for a "point-in-time snapshot."

* Glean from websites

* Pay attention to news and new hires.

* Make sure you're talking to your competitor's customers, because, "They're contacting yours."

Also, gather anecdotal evidence from current employees and ex-employees of other banks. Pricing information, for example, may be readily available off the Internet, but he's found that true pricing really happens at the negotiating table.

Complexities of competitive intelligence

Identifying the competition used to involve looking at banks located in your geographical market. That's all changed with deregulation and technology.

"Not only do banks have to look at the traditional set of local competitors," cautions Keith Stock, vice president of the New York-based financial services consulting firm Capgemini, "but to look at the national providers of products like credit cards and mortgages, and Web-enabled brokers that are, in effect, a clearinghouse for products and services."

Increasingly, banks have to watch the nontraditional participants in the financial services areas, like the Wal-Marts, Merrill Lynches, Schwabs and State Farms.

Compiling the competitive research requires constant vigilance on the part of banks, both large and small. Stock calls it strategic management. If you're a strategically managed bank, your business managers are assessing competitive activity on a daily basis.

Define strengths and weaknesses

Good competitive intelligence (CI) is invaluable for enabling your bank to spot strengths, weakness and opportunity among competitors...