Bank of America is struggling to position their mobile banking service in the continuously changing industry. The bank already has a mobile application but is evaluating if they should add more features to this app and how this will affect their clients.
• Bank of America is the largest U.S. bank holding company; it was founded in 1904 and expanded with several acquisitions.
• By the end of 2009 BoA was the leader in the market, serving 82% of the US population (over 53 M customers) and positioned number one in online and mobile banking.
• Very strong and best-managed banks before the crisis which brought losses and a very strong drop in ...view middle of the document...
• Citibank and Wells Fargo had different applications for their target groups, making this a customized service.
• Starcom, agency that supports the bank on digital matters.
• Other agencies and consulting partners.
• The banking industry was fragmented, with thousands of banks offering retail and wholesale banking services.
• 10 of the largest banks held 46.4% of total deposits, BoA being the largest one.
• The crisis of 2009 led to deep recession and a financial crisis that affected the retail banking business.
• Banks started waving fees and offering additional benefits in order to capture and retain customers.
• Mobile banking was introduced in the US in 2007 which added costs to each transaction but these were lower than call centers and IVR costs.
• Mobile banking had three options: mobile messaging (MSM and no software installation), mobile Internet (WAP), and mobile apps (more sophisticated and costly, Smartphone use was estimated to grow t0 46% of user in 2014).
1) Build new and various applications to target different customers
* Customers want customization in the products; this will increase retention and satisfaction.
* Marketing strategies can be segmented into different types of clients increasing efficiency and reducing costs.
* Superior brand and innovation perception.
* Cost of application creation will increase due to the different areas and type of customers at BoA
* Any changes in the bank services will have to be applied to all apps.
* Some customers will have to download and use various apps at the same time
2) Refuse to add complexity to the current application
* No extra costs on building a new application
* Customers that don´t like technology or doubt about security issues won't be affected.
* Other banks offer better mobile apps and this will increase their competitive advantage.
* Customer satisfaction will suffer if the app is not updated and does not fulfill their needs.
* Transactions will still be done through ATMs, Call centers and IVR, which are 4 to 11 times more costly.
Recommendation: Improve the complexity to the current application
After analyzing the options and the opportunity BoA has to differentiate themselves from their competitors while offering a great service to their clients, I would recommend to increase the functionality of the mobile app. This change will bring extra benefits to the different type of clients in a single download. The company will also cut costs in the type of transactions made by the clients. As we can see on Exhibit 1, transaction costs for Call Centers, branches and ATMs will be extremely higher than mobile transactions. Another aspect that leads to this recommendation is the continuous growth of the mobile market especially the Smartphone use. Having a mobile is necessary and has become a commodity for the population. Adolescents have mobile...