Bank of America Mobile Banking

Brown, who was responsible for the development and launch of mobile banking, reported on the current status, In less than three years we have four million mobile banking customers. Brown was hesitant to make the banks mobile app complex by adding more features. The added complexity could slow down the app and negatively affect user experience. He explained, App comple xity has led to some high-profile failures in the marketplace. This carries a huge risk. It was also unclear if users were ready to sign up for mortgages or credit cards on their mobile phones. Carrel reminded them, Dont forget that competitors view mobile as yet another platform to differentiate themselves. Just last month, Citi integrated credit card account information in its iPhone app. Citi customers can even track their credit card rewards on their mobile devices now. Carrel floated a second option, Why not create different apps for different target groups, say an app for Merrill Lynch brokerage, or for small business customers? Citi and Wells Fargo have done this, feeling they can provide users a more customized solution. (See Exhibit 1 for mobile banking apps for major players. ) McDonald, Brown and Carrel agree that they have to come up with a new strategy on mobile banking. Financial Services Industry The U. S. financial services industry was fragmented, with thousands of banks offering retail and wholesale banking services. In 2009 the 10 largest banks held 46. 4% of total deposits, with BofA the largest U. S. bank holding company, followed by JP Morgan Chase, Citigroup, and Wells Fargo. In 2008-2009, the financial services industry went through the most stressful times in recent history. The collapse of the U. S. real estate and subprime mortgage markets caused a dramatic fall in the value of mortgage -backed securities, which led to a deep recession in the U. S. and financial troubles abroad. In 2012 they situation in the banking industry has improved. Bank of America By 2009, BofAs businesses included retail banking (i. e. , deposits, debit and credit cards, mortgage loans), global wealth management, middle market lending, large corporate lending, global treasury services, and investment banking. By December 2009, BofAs markets covered 82% of the U. S. opulation, and the bank served over 53 million customers and small businesses. U. S. Mobile Banking Market Mobile banking was introduced in the U. S. in 2007. Consumers could access their bank accounts on the move from their cell phones. Many banks saw it as yet another channel to differentiate themselves from competitors and engage customers that could potentially lead to both higher income and increased customer re tention. While mobile banking introduced some new capital investment and operational costs, analysts projected it to be one of the least costly banking channels. Since almost all banks had a well established online presence, this was the easiest option for banks. Slow browser speed on many mobile phones coupled with small phone screens made this option less appealing to some users. The emergence of smartphones, such as iPhone, Android, and BlackBerry, allowed banks to provide a richer experience to users through apps. By optimizing the user interface specifically for these devices, apps had the potential to engage users. Smartphones were expected to grow in use from 10% in 2008 to 46% of the total U. S. mobile phone market by 2012. App development costs could range from $40,000 to several hundred thousand dollars. Research from Global Industry Analysts shows that mobile and internet banking are becoming increasingly intertwined. This is largely due to the success of smartphones, which afford consumers convenient access to internet banking. The global mobile internet market will continue to drive the expansion of the mobile banking services sector. Financial institutions are responding by launching downloadable applica tions and encouraging consumers to bank online and through mobile devices by rolling out mobile and internet banking services. Market Size and Consumer Adoption In 2009, an estimated 10 million consumers used mobile banking in the U. S. ; by 2014 this number was expected to grow to 37 million, representing 30% of the total expected online banking users in the U. S. Total annual transactions for mobile banking services were expected to increase from about 180 million in 2008 to 2. 4 billion in 2014. Improvement in mobile devices and networks, better features from banks, and increasing awareness among users were the main drivers of growth. Most banks required customers to be registered online banking users before they could sign up for mobile banking. However, a 2009 survey of 500 mobile users showed that almost 60% of consumers not currently using online banking would be interested in using at least one mobile banking service. In early 2010, Wells Fargo allowed customers to sign up for its mobile banking service, regardless of their online usage. In spite of increasing interest, mobile banking was still relatively small compared to other banking channels. According to an American Bankers Association survey, only 1% of respondents considered mobile as their preferred banking method, compared to 25% for online banking, 21% for branches, and 17% for ATM.