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Bank Of America Essay

2133 words - 9 pages

Bank of America


History of the company:
The bank of America has become one the most well known banks in the world. In fact this success is due to it several historical merges, especially with the bank of Italy, founded by Amadeo Giannini in San Francisco in 1904. The founder and president of Bank of America agreed to the merging on 1929. It operated under the name Bank of America, and in 1958 the bank harnessed the technology that lets credit cars to be linked directly to bank accounts by introducing bankamericard, and this was the progenitor of VISA. Bank of America first expanded to the borders of California with its acquisition of Seattle-based Seafirst Corporation in ...view middle of the document...

She closed her Bank of America account, cutting up her debit card on camera, and moved her money to a community bank. Plus, the Progressive Change Campaign Committee said it got more than 51,000 people to pledge to take their money out of major financial institutions, with 21,500 consumers planning to remove their money from Bank of America specifically. Americans flooded her with support. One month and 306,000 signatures later, she won Bank of America removed the charge on November 1, 2011.
Comentario [RN4]: An excellent example of how customer pressure can cause major image issues, as well as impact on profitability.

Bank of America Internal Issues
We all know that it is difficult for a bank to make money through debit cards, the only way they have is to charge their clients a fee for having one or the fee charged to a shop for making a transaction with a debit card. With the new Dodd-Frank financial reform, that will lower “interchange fees” (which is the amount banks can charge retailers for debit transactions), banks need a new way to make money with debit cards. So far the only solution Bank of America found was to increase by 5$ the monthly fee for debit cards holders. This is not a common thing in the USA, before that decision less than 2% of debit cards holders were paying such fees. Many mistakes have been made during the decision process and we are going to explain the ones that were made internally.
Comentario [RN5]: Good description of the issue

If proper research would have being conducted with their clients (which are the first ones to be affected by this decision), Bank of America would have seen that it was a bad idea and that many clients would change to another bank with no such fees. Instead they made it mandatory

and said that if you do not want to be affected by this then upgrade to premium (which need higher income)
Comentario [RN6]: Poor research and understanding of their client base.

Bad customer relationship, during a financial crisis a bank is often blamed for what ever is going on. It is really important in such times to maintain a good customer relationship. But Bank of America has always been seen has a bank that thinks about profits before its customers and it is really hard for them to change image with such crisis. Banks need to change their customer relationship; they should offer help to both their weaker customer and their best and not only their best customers. When a customer is in trouble they should offer then several solutions before getting their valuables.
Comentario [RN8]: I don't understand Comentario [RN7]: Good point

Bad strategy, bank of America strategy wanted to become the dominant bank in nearly every category of American finance, from mortgages and home-equity loans to commercial lending and wealth management. Bank of America was actually everywhere and nowhere at the same time. Their operations and divisions were so broad that they could not manage it well anymore.

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