Douglas, SVP of Mobile Product Development was quoted, “In less than 3 years we have four million mobile banking customers. That’s an adoption rate almost five to eight times that of our online banking several years ago.” Line-of-business managers are looking for leveraged mobile platforms with functionalities that can meet different needs and the different target groups such as: Merrill Lynch brokerage, mortgages, credit cards, consumer payments, etc… The capabilities of mobile banking through the use of smartphones or mobile web have become popular with today’s bank customers.
There are increasing overall growth in mobile banking in the financial services industry. In addition, the transaction cost1 of mobile banking and internet banking is much lower than the traditional channel (e.g. Branch, Call Center, ATMS and IVR). Due to the economic downturn, banks are looking for extend the service channels and aim to increase the profit via tradition core banking service, such as transaction fees. The system automation can reduce the operation cost; increase the transaction turnaround time and accuracy. With the popularity of smartphones and mobile data services, mobile banking can be the booming tools for banking industry profit engine.
However, investing in the enhancement of the mobile banking is costly and will directly affecting the bank’s revenue and brand images. The worse scenarios, may encounter customer complain and regulatory comments and punishments. Therefore, the management of BofA have to decide how can they effectively utilize this technology as a new media to make banking services easier, faster and more convenient for customer, at the same time, how can the app can help for BofA marketing the banks new products, service and increase the customer loyalty. In the short run, what do BofA tell the line-of-business managers – should the app increase functionality, build new app or refuses to add complexity to the current app? In the long run, how do BofA position the bank in this fast changing industry?
Analysis Mobile banking (app) is not a mandatory product (or say channel) for bank’s customer. It’s just an optional channel, based on the product itself, let’s analysis base on Porter’s 5 forces analysis.
1. New entrants are HIGH. There will not be any new large mass-market players or niche players bursting on the scene, but there will be new independent players like PayPal that will provide some similar functions app in the market.
2. Power of suppliers are from MEDIUM to LOW. The majority of the suppliers of mobile banking should be those technologies partners, technology consultants, outsource software house and marketing partners as alliance in some promotion campaigns. Bank has stronger power than those outsource software house in most situations.
3. Bargaining power of buyers is HIGH. Given the mobile banking is only an optional channel for customer. Customers still have other options to complete their transaction thru the bank and able to say NO to mobile banking. The switching cost of changing the channel is low but the switching cost of BANK may from LOW to MEDIUM.
4. Threat of substitution is HIGH. Currently customers still can utilize other channels to fulfill their needs via Branches, Call Center, ATMS, Internet banking and IVR.
5. Intensity of rivalry is HIGH. Many banks like Well Fargo, Citibank, JP Morgan are working on the mobile banking and each of these app have the same majority functions and include some differentiate functions.
BofA Mobile Banking App functionalities To install the app and apply the mobile banking is free. As the mobile banking include 3 major segments of core function: Mobile Website, Text Banking and Mobile App2 . The BofA’s new app include below functions:
•Check account balances for accounts and facilities lines held with BofA. •Pay bills. •Transfer funds between BofA accounts. •View transaction details for all BofA accounts or facilities lines, including posted, pending and scheduled transactions. BofA Mobile Banking App include the majority functions that customer requires and let’s talk about the Brand of BofA in the following section. The Brand of BofA & Competitors
Bank of America ($30.6B) is the most valuable banking brand in the USA. Its brand value has increased by 18% and it has a brand rating of AAA-. Despite concerns of further mortgage-related write-downs, Bank of America was also the #1 most valuable banking brand in the world at 2011. The Designs
The Bank and the Mobile Banking App Logo
Given the icon of BofA can be shown in the Bank and the mobile banking logo, it can help the customers to connect the mobile banking app to BofA. The color use of the Bank is Red and Blue and the Mobile banking is single using Red only. Red color is a powerful color, symbolizing energy, passion or even danger. It works best for action-oriented products or brands, products associated with speed or power, or dominant or iconic brands. The mobile banking icon didn’t use the Red and Blue color which only using Red to show the passion and commitment of the bank to customer via mobile banking. Bank of America and Mobile Banking Slogans
Recommendations Given the increment of additional functions will slow down the performance of the mobile banking app; it does not recommend incorporating the additional business functions to the current app. From technologies risk and regulatory prospective, it will be too risky if pulling all business applications in one single platform. If on module down, it will totally affect the bank normal day to day operations. In short run, suggest developing new apps for extending the advance mortgages, credit cards service or investments service for different business functions.
To leverage different branding to differentiate the different category of services that offered. Apart from leverage different brands3 own by the group, BofA can also cooperate with Smartphone and Telecom Services Providers to ingredient branding to provide the end to end mobile service. Bank customer can encounter discount on purchase latest smartphones, discount on data service plan and possible to issue mobile credit cards by offering promotions.
BofA can consider consolidating all apps in one single platform when there are needs in future. In long run, BofA can cooperate with the Telecom Services Providers and sizeable Merchants, to provide addition information for customer when customer arriving the merchants and let them know what kinds of promotions or discounts are offer. This can uplift the service from singling banking service to mobile living yellow pages. This can help to increase the customer loyalty and build strong connections with bank customers. It can also attract more alliance (other merchants) to share the promotion and marketing cost to developing a new banking and living experience. Of cause, it is necessary to maintain the balance of utilizing the mobile banking app, customers segments for marketing promotion events, if over sell which may obtain opposite result.
To differentiate BofA from other competitors, it is necessary to ensure the Bank can position the Bank with Stronger Branding and Images extend the services from “Banking” only to diversify the service to other related informational services in daily life and provide incredible services and experience for customers.
This can help the bank to reposition the bank as a full around bank which can fulfill customer day to day activities that require of any payment or transactions. This can help to identify stronger alliance for the long term development. In conclusion, BofA must keep on investing in mobile banking apps, as it is a trend that smartphone or more innovative device (e.g. Google device) will become more popular, bank must utilize these new technologies by re-design the current channels to increase the bank traditional income (e.g. Transaction fees) and other new incomes (e.g. investments service, financial consultation service, etc.) and extend the service with alliance to promoting the daily service tools. This can help the bank to enlarge the customer groups, define new customer groups segments or sub-segments for better marketing and promotion campaigns and maintain the brand in the leading positions.
Exhibit 1 Costs per Transaction by different channels
The Pricing, when the apps developed to more advance, and able to customize and fully integrate full around service for customer, at that time, BofA can consider of charging customer for service charges after trial. If customers are satisfying with the full around services after the trial, the bank can also extend the income by promotion the comprehensive mobile banking and service apps. Exhibit 2
Mobile website Customers can pay bills whenever they want with optional online Bill Pay. Check balances on checking accounts, savings accounts and credit cards. Transfer funds immediately to any other Bank of America account. Locate banking centers or ATMs, along with maps and directions. Text banking
Use text message banking to request information about self-own checking, savings and credit card accounts. Getting the answers you need is simple when it’s received within seconds on your phone. Mobile app
Mobile Banking App, designed specifically for iPhone®, iPad®, Windows® Phone, BlackBerry®, HP® webOS™ and Android™ devices. Wherever you are, you’ll have easy access to your Bank of America accounts with their quick and convenient Mobile Banking App Exhibit 3 – BofA’s branding