Case Study Bank Of America

Bank of America: Redefining Customers

Introduction

How can Bank of America (BofA) gain value by positioning itself in the fast changing and growing industry of mobile banking? It is certain that the increased usage of mobile applications and smart phone users may rapidly shift the way consumers bank. Bank of America is considering how they can fulfill customers’ needs and desire for better quality mobile banking as technology develops. As increasing numbers of technology-savvy users want more functionality of applications, there are managerial issues arising from building new applications or to add complexity to current applications. They face problems whether to have different applications for different target groups or to just add complexity

It is leading the early stage of the mobile banking market. As a first mover in the market, early innovator customers are well aware of its service and it is enjoying its market initiative over competitors by consistently maintaining number one position of online and mobile banking in United States. The mobile banking registering and usage is 5 to 8 times faster than its online market at the beginning. Also, it shows its strong position in mortgages as well. Because of its strong position on online banking and mortgages originator and servicer, BofA started its mobile banking and tries to seek opportunities to capture mortgage service users by letting them to sign up mortgages through mobile. Due to financial crisis effect, many banks are facing hard times with lower number of transaction rates, and BofA is one of it. Even with the tremendous early investment spending, in year 2009, it was able to achieve $6.2 billion net income, which was considered high among bank industry. Its cost per transaction was estimated at around $0.10, but these were expected to drop to $0.03-0.04 as service get scaled and

Customers will easily try and adapt to new technology. Like online banking, or even more than it, once customers have entered all of his or her banking information and bill payments, they will be less reluctant to change their banking service as switching costs increase.

Moreover, BofA can try to contract with major wireless service companies such as AT&T and Verizon to pre-install this application to increase its awareness to customers through easily accessible way. Otherwise, BofA can try to contract certain cheaper payment options on unlimited data-access or usages with this application. As customer’s behavior tends to stay with it’s ‘standard’ from initial service and its experience, having strong distribution channels through wireless company may be costly for BofA, but it will secure its market rapidly and safely.

Overall, the key for BofA to sustain its largest market share is differentiation through marketing mix (4Ps). Even though differentiating an item may charge BofA to increase cost, the willingness of the customer’s payment towards the usage of application will increase as well. This differentiation will engage brand loyalty and potentially increase entry of barriers to competitors. Moreover, after BofA secure the market, the next step would be seeking for more opportunities that are arising in the mobile payment market and table