Bank of America Case Analysis

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Bank of America – Case Analysis

Prepared
By
Kesha S Mitchell

April 30, 2013

AMBA 650-1134
Marketing Management and Innovation
Professor Philemon Oyewole

In 2007, Bank of America (BofA) 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. 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. with 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...
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