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Bank of America: Mobile Banking

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Ryan Kelly

on 17 November 2015

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Transcript of Bank of America: Mobile Banking

Identifying the Change
2007 BofA launches Mobile Banking Platform

Bank of America: Mobile Banking

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
Corrective Action Analysis
Mobile Banking is the Next Big Thing
Customer Lifetime Value
Causes & Effects
Dependent Variable(s)
Retention Rates - Profitable Customers
Problem Statement

Given the current state of change:
What is the most
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

Mobile Technology
Financial Crisis
Competitor Analysis
Step1: Short Term
Satisfy Line-of-Business managers
Enhance current app to include

Extends current features of app to minimize complexity
Extend SMS Text banking
Serves 100% mobile market

Optimal Mix Resource Allocation:
Mobile App, Online Banking, SMS
Step 2: Medium Term:
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:
Mobile App, Online Banking, SMS
Step 3: Long Term
Extend to serve international and underbanked
Mobile app provides virtual banking
Fully interoperable system within mobile apps

Optimal Mix Resource Allocation:
Mobile App, Online Banking, SMS
Proactive Approach to
Value Delivery:

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
Evolution (Revolution) Of Online Banking on BoA
Strong, Positive Impact on for BoA
Average Cost per Transaction = $0.03
Evolution (Revolution of Mobile Banking on BoA
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
Mobile Banking Effects on Transaction Costs



Customer Lifetime Value of Segment

Cost savings feed directly back into Re-investment, development costs of apps insignificant by comparison
Bank of America
Successful Results
4M mobile banking customers
High adoption rate relative to online banking
#1 position in mobile banking
2008 Financial Crisis

Merrill Lynch acquisition
Having that said, BofA mobile strategy needs to consider impact on:
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
"Dynamic Optimal Mix" Strategy
Root Cause: Mobile Technology
Larger than expected 4Q 2008 losses
ROI will be high
$5MM (cost savings)
/$50000 (app investment)
Full transcript