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Bank of America Mobile Banking Case study

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by

David Rosales

on 6 February 2013

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Transcript of Bank of America Mobile Banking Case study

SOM660 Marketing


Bank of America Mobile Banking Case Study


Mason, Pace, Rosales Key Issues The key issue for Bank of America (BofA) is to determine how to develop its mobile banking strategy:

In the short run, what is the most profitable alternative for credit card and mortgage managers asking for increased exposure in the bank’s mobile app?
How does BofA leverage its mobile app(s) for long run profitability?

Key Factors:

Revenue as a product of market share of mobile transactions
Development Costs Alternatives A) Leave as is
B) Expand app to include other product lines
C) Create new apps for different divisions
D) Launch SMS option
E) Consider new apps for novel product lines Recommendations Long Term Strategy Step 1: Integrate Credit Card and Mortgage businesses into current Bank of America Mobile App

Step 2: Introduce Bank Of America E-Com App which includes Local Mobile Payment (LMP) and Person 2 Person (P2P) capabilities

Step 3: Expand to international markets using existing mobile apps to create “virtual banking” regardless of physical branch presence Local Mobile Payments (LMP) Reduced transaction cost to BofA and merchants
Merchants reduce costs associated with current point of sale credit card services
Instant access via BofA E-Com to business accounts and transaction history
Cost savings to BofA by eliminating more expensive consumer and merchant transactions Expand current app to include basic credit card and mortgage functions to increase market share of expanding mobile transaction market and shift customer activity to cost-effective channels

Offer a mobile payment app.

BofA’s entrance into Local Mobile Payment (LMP) and Person-to-Person P2P mobile shopping market (tap a large and growing market that currently lacks the regulation of banks and "added security". BofA E-Com App Local Mobile Payments (LMP)
Contactless payment system via mobile devices as alternative to traditional cash, check, debit and credit transactions

P2P
Offers consumers the ability to transfer funds directly to other individuals and businesses Person 2 Person (P2P) Cut out the middleman (BofA branch/ATM, PayPal) means reduced transactional costs
Secure payment system that is regulated and insured like a bank, unlike PayPal
Currently the only established competitor is PayPal
Large potential market for growth
Estimate 2.4 billion e-commerce transactions in 2014
78 million active PayPal users
3 billion “under-banked” consumers worldwide Benefits of BofA E-Com App Leverages BofA position as #1 online and mobile Bank
Cost efficient way to provide additional services to existing consumers and reach previously unreachable customers
Few competitors
Costs include programming and maintenance of application after roll-out Short Term Strategy How we define our market (incremental transactions)
Define population to be targeted with mobile strategy
Retain existing functionality
Enhance current app by adding basic credit card and mortgage features (increase passive customer engagement and minimize complexity)
Increased customer engagement and cross-selling
This would increase transactions and save money Benefits 80% current mobile users fall in the “passive” category
Potential for 615MM incremental transactions in 2010
1,850MM in 2014 (highest among all customer segments)
BofA’s market share of mobile transactions will increase as credit card and mortgage customers from all groups utilize the app and extend their activities with the bank (as seen in BofA’s lessons from online banking)
Incremental transactions made by mobile customers will come at a reduced expense to BofA Additional benefits: New customers poached from other banks is 38MM transactions in 2010 and 119 in 2014
Expand its reach into mobile transaction market as all customer groups experience increased convenience and streamlining of banking needs.
App for free = limits the barriers to entry
Enhanced features increase the likelihood of customers finding value in mobile banking
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