The short term strategy is to solve the problem that how we define our market, and define population to be targeted with mobile strategy. Retain existing functionality. Enhance current app by adding basic credit card and mortgage features (increase passive customer engagement and minimize complexity). Increased customer engagement and cross-selling to make sure increasing transactions and save money.
The long term strategy has three steps to executive. (1 Integrate Credit Card and Mortgage business into current Bank of America Mobile App. (2 Introduce Bank of America e-commerce app which includes local mobile payment and person to person capabilities. (3 Expand to international markets using existing mobile apps to create “virtual banking” regardless of physical branch presence.
For local mobile payment, Bank of America should reduce transaction cost to Bank of America and merchants. Merchants reduce costs associated with current point of sale credit card services. Instant access via Bank of America e-commerce to business accounts and transaction history. Eliminating more expensive consumer and merchant transactions could save cost to Bank of America. For person-to-person, it should cut out the middleman which means reduced transactional costs. Secure payment system that is regulated and insured like a bank, unlike the currently the only established competitor, PayPal. P2P market has a large potential for growth, estimate 2.4 billion e-commerce transaction in 2014 and 78 million active PayPal users, 3 billion “under-banked” consumers worldwide.
The benefits of its app are at following sentences. 1) Leverage Bank of America as first online and mobile bank. 2) Cost efficient way to provide additional services to existing consumers and reach previously unreachable customers. 3) Without the existing company, PayPal, there is a few competitors in this market. 4) Costs include programming and maintenance of application after roll-out.
There are other additional benefits.
1) New customers poached from other bank is 38 million transactions in 2010 and 119 in 2014.
2) Expand its reach into mobile transaction market as all customer groups experience increased convenience and streamlining of banking needs.
3) App for free = limits the barriers to entry.
4) Enhance features increase the likelihood of customers finding value in mobile banking. Bank of America’s market share of mobile transactions will increase as credit card and mortgage customers from all groups utilize the app and extend their activities with the bank (as seen in Bank of America’s lessons from online banking). Incremental transactions made by mobile customers will come at a reduced expense to Bank of America.