Bank of America Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Bank of America Case Study Solution

Introduction

Bank of America Corporation – one of the largest financial services and banking corporation in the United States, headquartered in Charlotte, North Carolina. It was formed in the year 1998 through the NationsBank acquisition of theBank of America. The Bank of America is positioned to deliver the long term shareholder’s value, thanking to the straightforward way in which the banks drive responsible growth and serve its customers. The Bank of America is the international leader in trading, investment and corporate banking and wealth management across the broad range of the asset classes, serving individuals, institutions, governments, and corporations all around the globe. The company tends to serve its clients and customers through operation across US, its territories as well as more than 35 countries. The company has been engaged in driving the responsible growth and its commitment to that has resulted in record outcomes – strong earnings with the employee and customer satisfaction.

Mission and Vision statement

The mission statement of the bank is to offer wide range of investment and lending products that tends to serve middle and low income individual and families, create sustainable practices for the long haul as well as improve underserved moderate and low income communities whereas the vision statement of the Bank of America is to be the finest financial service company of the world. The vision and mission statement, stipulates that the company is committed to responsible growth as well as accountability on the national as well as international scale.

Products and services

The bank service three types of the customers – institutional investors companies and people. It has been serving all three customer groups since its inception and outside the US, the company serve institutional investors and larger companies. This business model helps the company in simplifying the operations and reducing the risk profile.

From business, personal and commercial banking to capital markets and wealth management businesses, the bank provides extensive range of financial services and products to million clients in United States and all around the globe. The bank also offers the number of the services and products geared towards the owners of the small business. The small businesses could take the benefit of the health saving account, bill paying account, remote deposits, cash management tool and small business checking account offered by the Bank of America.

Future growth

As the bank has been operating in the time when the advancements in technology are creating unprecedented opportunities for making financial services more convenient, seamless and innovative, the Bank of America is contemplating to combine the cutting edge technology with the industry leading expertise to build forward thinking and smart solutions that would allow it to continue leading the way in assisting institutional investors and companies improve their financial performance and people live better live (Britannica, 2020).

PESTLE Analysis

Political:

The Bank of America being global financial services provider is committed to participate in the political process that is found associated with the solid practices of corporate governance. The maintenance of PAC program by the Bank of America allowing its employees to remain engaged in the political process. This significantly ensures the continuous decisions regarding funding and compliance with all the finance laws and regulations of the campaign that are related to the financial services industry. Therefore, Bank of America is known to maintain a strong relation with the government and political activity compliance program. (Officials, 2020)

Economic:

The economic environment the United States tend to be mainly based on the interest rate, economic growth, inflation rates, currency exchange rates, and levels of disposable income GDP. In the year 2019, the inflation rate of the United States was estimated to be about 2.28% which is considered good at the moment. (StatBureau, 2020) The US interest rate range was in between 2.25 to 2.5% in the middle of slow economic growth which is expected to decline further. (BBC, 2019) Whereas there has been an increase in the GDP growth of the United States by 2.3 percent in the year 2019 as compared to 2.9 percent in the year 2018. (Official, 2020)

Social:

About 50 percent of the employees’ base in the Bank of America are women and about 45 percent are the people of color. This is mainly to promote gender equality, social justice and emotional well-being of people of America. Similarly, the proportion of American unbanked population has also been decreasing i.e. 8.2 percent in the year 2011 to about 6.5 percent in 2017. With the increase in the number of households in the US, the median household income has also been increasing i.e. about $ 63,179 in the year 2018. (EDWARDS, 2019)

Technological:

Technology plays an important role not only in the development of bank but also positively influences the economic growth. The Bank of America has been consistently investing in new technological initiatives since 2010 i.e. about $30 billion which includes the development of digital and mobile banking services. For instance, the development of Aira service is to assist low-vision or blind individuals to gain better access to ATMs and financial centers. In contradiction, the use of advanced technological approaches has also resulted in increased risk of cyber-security concerns which are expected to be protected by implementation of information security program.

Legal:

Product purchasing obligations of Bank of America mainly include vendor contracts which are considered to be associated with software contracts, processing services, and communication services. Some of the non-US employees offering their services in the Bank of America are known to be covered under defined contribution pension plans followed by separate administration according to the local laws of the state. Similarly, the changes in the law of federal income tax by Tax Act resulted in the reduction of tax rate of statutory corporate income from 35% to about 21 percent with changes in the non-US business activities of the Bank of America.

Environmental:

Environment sustainability is considered as the priority of the corporation. The Bank of America has been continuously investing in sustainable practices that is reduction in waste, paper usage, carbon emission, renewable energy, and environmental efficiency of the buildings. The Corporation is more focused on providing options to the clients in order to assist in financing a more environmental friendly surrounding. Similarly, the Corporation is to drive responsible growth with increased focus on ESG – environmental, social and governance leadership in order to address some of the greatest challenges of the society. (Official, What would you like the power to do?® Annual Report, 2019)

Porter Five Forces Model

Intensity of the competition

The banking industry of the US in in the much healthier place now after the economic downturn of 2008. The banking industry is categorized as highly competitive, fragmented and lucrative. There are number of competitors, despite of the economic challenges ahead, tends to have a head start in readjusting to the new world. The biggest competitors of the Bank of America includes JPMorgan Chase, Citigroup and Wells Fargo.

The intensity of competition is high force due to the fact that the cost of switching from one bank to another bank is relatively low which in turn intensifies the significance of the rivalry from within the industry. It does not cost much to the customer to close an account in one bank and open a new account in another bank. The competition in the banking industry of the US is because of the high level of the exit barriers. The large number of competitors are in race of stealing the market share of the other player through offering the integrated, quick and best solutions.

In the banking industry, the premium service quality and productivity plays a significant part for the customers in evaluation of service provider performance & it is a key to build long term customer relation and to gain customer loyalty & customer satisfaction. Additionally, the service quality and productivity is prime aspect of the premium customer experience due to which the competitors consistently monitors their services in order to improve customer loyalty and retention and to ensure maximum customer satisfaction. The competitorstends to build the positive customer experience through satisfying them through properly meeting the customer expectations, demand and offer those products and services that are up to the market standards.

Bargainingpower of buyer

The banking industry of any country heavily depends on the consumer bargaining power. The bargaining power of buyer is the moderate force due to the fact that the buyers have multiple options. An improved service quality and productivity helps the competitors in the market in developing attitudinal loyalty that is perquisite for retention of customers. Hence, if the individual has one bank that tends to service their checking, saving, mortgage and banking needs and satisfy them through productivity and high quality services, it would be hassle for the individual to switch to another bank. With core consideration of retaining existing customers and attract new ones, the competitors are releasing new features such as neobanks and startups with the disruptive technologies and adopting the trends in the banking industry...........................................

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