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Transcript

Transactions

Costs

Revenues

Customer Lifetime Value of Segment

Cost savings feed directly back into Re-investment, development costs of apps insignificant by comparison

Introduction

Identifying the Change

Bank of America

  • Successful Results
  • 4M mobile banking customers
  • High adoption rate relative to online banking
  • #1 position in mobile banking
  • 2007 BofA launches Mobile Banking Platform

  • Merrill Lynch acquisition
  • 2008 Financial Crisis

  • Larger than expected 4Q 2008 losses
  • Founded as Bank of Italy in 1904 and became Bank of America in 2000 after a merger with NationsBank
  • Businesses include:
  • Retail banking
  • Global wealth management
  • Middle market lending
  • Large corporate lending
  • Global treasury services
  • Investment banking
  • 6,000 banking centers and 18,000 ATMS across the US with 250,000 employees
  • As of 2009, BofA was the number 1 mortgage originator and had a net income of $6.2 billion
  • Introduced mobile banking in May 2007

"Dynamic Optimal Mix" Strategy

Step1: Short Term

Step 2: Medium Term:

Step 3: Long Term

Problem Statement

  • Satisfy Line-of-Business managers
  • Enhance current app to include credit card and mortgage features
  • Extends current features of app to minimize complexity
  • Extend SMS Text banking
  • Serves 100% mobile market

Optimal Mix Resource Allocation:

1:2:3

Mobile App, Online Banking, SMS

  • Introduce New Mobile Product Lines
  • BofA E-Commerce App
  • P2P Payments
  • Local Mobile Payments
  • Few competitors, i.e. PayPal (9% global market)
  • Secure System
  • Can regulate and insure funds since it's a bank
  • Potential Large Market
  • $300 bn funds

Optimal Mix Resource Allocation:

2:2:1

Mobile App, Online Banking, SMS

  • Extend to serve international and underbanked
  • Mobile app provides virtual banking
  • Fully interoperable system within mobile apps

Optimal Mix Resource Allocation:

3:1.5:0.5

Mobile App, Online Banking, SMS

Given the current state of change:

  • What is the most profitable alternative for line-of-business managers (credit card/mortgage) asking for increased exposure in the bank's mobile app?

  • How does BofA leverage its mobile app(s) for long run profitability?

Proactive Approach to

Value Delivery:

Dependent Variable(s)

  • Keep position as number 1 online/mobile bank
  • Dynamically Change Marketing Mix Strategy
  • Increase Mobile Banking Awareness
  • Lead to incremental transactions
  • Increased retention rates
  • Lock in Effect - Increased Switching Costs
  • Similar to original ATMs lock in effect
  • Mind Share - all channels synced, all financial transactions through BoA
  • Having that said, BofA mobile strategy needs to consider impact on:
  • Revenues
  • Costs
  • Retention Rates - Profitable Customers

Conclusion

Corrective Action Analysis

Causes & Effects

  • Mobile Banking is the Next Big Thing
  • Reach
  • Adoption
  • Customer Lifetime Value

Mobile Banking Effects on Transaction Costs

Mobile Technology

Evolution (Revolution) Of Online Banking on BoA

  • What's Happening?
  • Smart Phone Penetration
  • Consumer shift toward Smart Phone technology
  • What Does this Mean?
  • Tremendous opportunity for growth in via Mobile Banking Solutions
  • Dynamic interplay b/t Online Banking, SMS, and Mobile Applications
  • Strong, Positive Impact on for BoA
  • Average Cost per Transaction = $0.03

Financial Crisis

Competitor Analysis

Evolution (Revolution of Mobile Banking on BoA

Root Cause: Mobile Technology

  • Money Movement - $10,000MM
  • BofA Market Share 35% - Leader
  • 2009 US Mobile Transactions - 500MM
  • BofA Transactions - 175MM
  • $/Transaction - $57.14

  • Adoption Rate FAST!
  • 5-8x Online Adoption Rate

ROI will be high

Example

$5MM (cost savings)

/$50000 (app investment)

QUESTIONS???

Bank of America: Mobile Banking

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