Digital Transformation at Bank of America
| Case Code: ITSY129 Case Length: 17 Pages Period: 2007-2021 Pub Date: 2022 Teaching Note: Available |
Price: Rs.400 Organization: Bank of America Corporation Industry: Financial Services Countries: United States Themes: Digital Transformation, Digital Strategy, FinTech,Innovation |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Changing Landscape of Retail Banking Sector
The advent of the fintech players led to four basic changes in the way the retail banking sector functioned. Traditional banks were forced to take cognizance of the changes in the financial system environment. However, the future success of the fintech revolution was entirely dependent on how the banking sector reacted to the changes. There were two possible approaches. The sector could view fintech companies either as disruptors or as enablers. In the former, the fintech sector was perceived as disruptors and banks were wary of them..
About BOA
In 1998, the then-largest American bank, NationsBank based in Charlotte, North Carolina, and BankAmerica Corporation based in San Francisco, California, merged to bring BoA into existence. The merged bank had assets of US$570 billion, which made it the largest bank by assets in the US. At that time, this merger was the largest in the US banking industry. Although the new bank had a wide network of branches and ATMs, it did not have much of a presence in the Midwest and the Northeast part of the US..
BOA – Embracing Technology
Industry observers stated that Fintech companies had grown silently in the first decade of the 21st century. The legacy banks faced the heat of the fintech companies only when the financial sector was affected by the subprime crisis, which on the one side squeezed the liquidity position of the company and on the other side increased regulatory compliance such as Basel’s risk-weighted capital requirements and Dodd–Frank Wall Street Reform and Consumer Protection Act. Experts opined that banking institutions had to follow these regulations..
Benefits of Embracing Technology
Experts stated that with the start of the third decade of the 21st century, BoA was still in the race and giving tough competition to new-age fintech firms only because it had continuously invested billions of dollars in technology, maintained its efficiency, continuously upgraded and modified existing approaches, and regularly added brand-new features, apps, and functionalities in its system. Digital innovations and changes also helped BoA earn more than 170 awards between 2018 and 2021..
Challenges Beyond 2021
Although the company had emerged as a leader in online and mobile banking, it still faced many challenges. Consumer studies by Cornerstone Advisors, a bank consultancy firm, found that the percentage of millennials who treated their BoA checking account as their primary account had fallen by 9% between October 2020 and July 2021..
Exhibits
Exhibit I: Various Technologies Used by BoA
Exhibit II (A): Breakdown of Patents Received by BoA in 1H2021
Exhibit II (B):
Example of Patents Granted in 1H2021
Exhibit III: Top 10 US Banks in Innovation and Technology
Exhibit IV: Breakdown of Patents Received by BoA in 2020
Exhibit V: Erica’s User Base and Interactions (in million)
Exhibit VI: Awards and Recognition to BoA in 2020 and 2021
Exhibit VII (A):
Growing Digital Performance by the end of 2020
Exhibit VII (B): Global Banking Digital Growth by the End of 2020
Exhibit VIII:
Percentage of Consumers having Primary Checking Account with BoA
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