Bank of America Executive Memo
Bank of America Executive Memo MKTG 5721
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This 2 page Bundle was uploaded by Frederick Notetaker on Tuesday April 26, 2016. The Bundle belongs to MKTG 5721 at University of Missouri - St. Louis taught by Ho Kim, Ph.D. in Spring 2016. Since its upload, it has received 7 views. For similar materials see Digital Marketing Strategies and Measurement in Marketing at University of Missouri - St. Louis.
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Date Created: 04/26/16
Executive Memorandum Bank of America Frederick Eccher Bank of America launched its mobile app in 2007 for smartphones. SMS (short message system) broadened the banks reach to many devices. In less than 3 years it had more than 4 million mobile banking customers. This 5-8 times popular than Bank of Americas online banking. In 2010 the head of Bank of America Digital Marketing group talked over its mobile strategy with its Mobile Product Development VP and a VP at Starcoms Strategy and Analysis division. Bank of America managers constantly made requests to add functionality for their divisions such as mortgages and credit cards. The perceived problem was more functionality would slow down the app negatively affecting user experience and lead to spectacular failures for Bank of America. Citibank had already added credit card functionality to its mobile service though. One idea floated was to make multiple Bank of America apps so the users could pick and choose what they wanted taking up space on their phone. Doing this would take resources from some of Bank of Americas core functionality and thereby increasing the opportunity cost of the project itself. So this needed to be considered in the broader context of how important is mobile banking likely to be to Bank of America in the future. From 1975 to 2009 insured commercial banks had declined from 14,628 to 6,911. In 2008 subprime mortgages wrecked markets damaging securities and caused a deep recession in the US. This resulted in a credit freeze in as banks worried about their capital, consumers and businesses cut back in their spending as well. Small banks took this as an opportunity to steal customers from the larger banks but service and convenience won out in the end. By 2009 Bank of America businesses included retail banking, global wealth management, market lending, treasury services, and investment banking. Bank of America covered 82% of the US population serving 53 million customers, it was in the lead in 23-30 metro areas, had 6000 banking centers and 18000 ATMs across the county. It was number one in mobile, mortgages, managed 1.8 trillion in assets with 119 billion in revenues and a net income of 6.2 billion. That being said Bank of America was not immune to the subprime loan losses as it acquired Merrill Lynch making it worse for the bank. When looking at the technology and the cost associated with fees mobile cost less per transaction compared to all other service transactions the bank offered and was predicted to get cheaper. The cost to develop a complex app could cost hundreds of thousands of dollars. App usage had increased from 2008 180 million to 2.4 billion transactions per year by 2014. In that same timespan virtual goods in the US went from 677 million to 2 billion via mobile phone bills. Just looking at these trends it should have been apparent to Bank of America that the country was hungry for increased mobile functionality and that it would be worth the cost in the long term by saving money per transaction and increasing user happiness.
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