Bank of America Case Analysis

April 15, 2018 Commerce

Corporation launched the largest secure mobile banking service in the United States and has over four million mobile banking customers. BofA mobile banking service gives the customers access to their checking accounts for balance, transfers funds and to pay bills through a mobile application (app) on their mobile phones and the mobile web on their phone’s browser.

In past years, BofA has been discussing the bank’s mobile strategies concerning mobile banking and how to incorporate mobile banking that is specific to the customer’s business needs such as credit cards and mortgage loans, etc. The growth in mobile users was an eye-opener for the retail banking business and has caused lending margins to drop and new federal regulations to be implemented. BofA continues to struggle to position their mobile banking services in the continuously changing financial industry.

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The underlying problems facing the organization are the following: * How to widen the bank’s mobile applications by adding more features * How to create different apps for various target groups * How will mobile banking affect their clients in the long run Organization Bank of America (BofA) Corporation is headquartered in Charlotte, NC and was established in 1998 from a structured merger between BankAmerica Corporation and NationsBank. BofA is an American multinational banking and financial services company for consumers, small and mid-sized businesses, government and corporations. ith a range of banking services such as investment banking, global wealth management, asset management, large corporate lending and retail banking (e. g. , deposits, debit and credit cards, mortgage loans, lines of credit). Throughout the years, the expansion BofA had made several acquisitions with a bank–FleetBoston; credit card merchant–MBNA; investment management company–US Trust; mortgage company–Countrywide; and Merrill Lynch. By investing in these companies, BofA has become the second largest financial institution in the US and holds the top position in online and mobile banking in the country.

In 2009, BofA covered 82% of the US population, served over 53 million customers and small business, purchased 6,000 banking centers and installed 18,000 ATMs across the country, (Case, pg. 2). Within that same year, BofA’s revenues were at its all time high and the company had about 250,000 employees. BofA suffered a substantial amount of losses at Merrill Lynch and losses associated with real estate backed equities (e. g. Fannie Mae and Freddie Mac) during the financial crisis.

The US government provided guarantees and billions of dollars in capital to BofA to sustain the financial market but the support from the federal government led the investors and customers to relinquish a certain percentage of ownership to the federal government to avoid bankruptcy. This later led to the stepping down of the CEO, Ken Lewis, and the head of consumer and small business banking, Brian Moynihan, took over as CEO in 2010. Industry The financial industry is comprised of financial services, which embodies a broad range of products and services in the banks and savings institutions, trust organizations, finance and leasing companies.

The Federal Deposit Insurance Corporation (FDIC) protects some activities of the financial industry. The FDIC insures deposits in bank institutions; identifies, observes and addresses risks to the deposit insurance funds; reduces risk outcome on the nation; and may assist the effects on the financial system when banks fail. The financial industry went through turmoil in 2008 and 2009. The collapse of the US real estate and mortgage markets caused a dramatic fall in wealth represented by mortgage securities which resulted in credit freezes in banks and consumers and businesses reduced their spending.

The banking industry is a highly competitive market, which caused a problem for the larger banks and gave the smaller banks a competitive advantage. These advantages led the smaller businesses to concentrate on convenience locations, better customer service, reduction of banking fees, waiving of ATM fees and the ability to cross-sell extra products and services. According to the research, in 2009 the consumers chose their banks based on traditional criteria, such as low account minimums, competitive rates, and convenient locations. (Case, pg. ) Competitors BofA competitors in the US bank holding companies are JP Morgan Chase, Citigroup, Wells Fargo and PNC Financial Services Group. JP Morgan Chase is the leading mortgage lender and credit card issuer in the financial industry. It has more than 5,500 branches, operational in over 60 countries and it brags investment banking and asset management operations. Citigroup has over 200 million customer accounts and does business in more than 160 countries. It supplies deposits and loans, asset banking, brokerage, and wealth management.

Citigroup selling strategy is to sell to underperforming and noncore businesses and to refocus on traditional banking. Wells Fargo Bank has over 6,200 bank branches in 40 states in the US. It believes in community banking which consists of corporate banking, investment banking and provides financial advising in wealth management, retirement, and brokerage services. PNC Bank operates approximately 2500 branches in the mid-Atlantic, the Midwest, Florida and Canada. It offers retail and corporate banking, investment banking, personal and institutional asset management. Mobile Market

With over four million mobile banking customers, BofA is leading among its competitors in the mobile market because of the attributes in online banking with the superfluous convenience to access their bank accounts on the move. As banks are constantly finding ways to differentiate themselves from their competitors and connect with their customers, BofA online banking has increased its capital investments, reduced operational costs, retained its existing customers and gained new customers. Technology has changed the banking industry by introducing the mobile internet, mobile messaging and mobile application.

In order to use the mobile banking services, customers will have to use their mobile phones with a data plan, which works through a short message system (SMS) and wireless application protocol (WAP). The SMS works with all wireless operators and requires no software installation. And by having the WAP, the customers are connected to the bank’s online website by using the mobile phone web browser. Most banks already have an established online banking website which has been financially prosperous and cost effective option for their financial institution.

The appearance of mobile phones, such as iPhone, Blackberry and Android, has allowed banks to provide mobile applications. Mobile applications are systems software designed to run on smartphones, tablet computers and mobile phones. These application platforms have banking apps which allow customers to optimize the linking software by locating bank branches and ATMs through the global positioning system (GPS) and do banking anywhere without using a computer. With model banking, financial intuitions have been successful with mobile payments services.

These services include local mobile payments, mobile commerce and person-to-person (P2P) payments. The local mobile payments were a substitute for using the debit and credit cards and customers did not have to sign a receipt when making payments over their mobile phones. Mobile commerce allowed customers to make payments for goods and services from merchants without physically being located at their facility. For example, you are able to donate funds by using a text message and will add the price to your mobile carrier bill.

P2P allowed customers to transfer funds to another person through the mobile phone. Using these methods of payments allowed for financial institution to reach nonbanking customers, which added to their value of life through convenience Buyer Behavior The Four P’s (price, product, place and promotion) helped BofA develop its marketing strategy for mobile banking. Since the launch in 2007, BofA leads the financial industry in mobile innovations and the creation of new mobile apps features to its customers.

BofA does not charge its customers for the use of their online banking and mobile services. BofA customers can use mobile websites, text banking and mobile apps to gain access to their banking information. The customers find mobile banking as a convenience in their daily lives by having the ability to access their bank accounts anywhere. BofA promotes the advantages of their mobile banking through social media, online pop-ups, and through its mobile and online banking. SWOT Analysis

BofA provides such an array of financial services and remains ahead of its competitors. The creation of the mobile applications has caused several advantages and disadvantages. The following will provide the strengths, weaknesses, opportunities and threats: Strengths: * Convenience via online banking, mobile banking and retail branch availability * Brand recognition is known throughout the US and globally * Attracting customers through product and service innovations * Satisfaction of customers increased * Retention of existing and new customers Weaknesses: Reduction of operational services such as ATMs and banking centers * Additional integration channels and third-party suppliers with different technology * Hard to track customer’s mobile transactions * Difficult to promote via online advertising Opportunities: * Use of top online channels such as YouTube, Google and Hulu for advertising * Graphical displays during integrated programs * Decreased cost for online advertising Threats: * Security risk and federal regulations * Loss of interaction with customers * Functionality of apps makes the server slower Building of new apps using one operating system Recommendation Most BofA customers want easier and more convenient access to their bank accounts. Mobile banking provides a direct link from the mobile phone to the bank without going through additional browsers or third-party applications. As BofA begins to consolidate with other financial institutions, this will provide more functionality it needs for its platforms. For security, if customers added the mobile application on their phones it will streamline hackers to gain valuable information about the customer’s bank login credentials.

All customers are required to put in a username and password and provide a subsequent feature of verification to gain access to the accounts. BofA should help their customers in alleviating fears when using the mobile application. The more users that take advantage of mobile banking, the more costs will be cut with automation and attract those who are not using automated banking into their electronic customer database. BofA should educate its customers on security used for mobile apps and explain how customers are protected.


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