Business

Bank of America | Jobs, Benefits, Business Model, Founding Story

Bank of America provides a range of banking and non-banking financial services to a broad spectrum of clients, with a view to helping them grow and manage their finances.

Bank of America has its roots in a number of predecessor companies, dating back to the earliest years of America’s independence. According to the Company itself, its earliest predecessor company was the Massachusetts Bank, which was established in 1783 by a group of businessmen led by Moses Michael Hayes.

The start of Bank of Americas operations, however, are frequently dated to the foundation of Amadeo Giannini’s foundation of Bank of Italy in San Francisco in 1904, which operated initially as a provider of loans to immigrants. As its operations expanded across California, and then across the US more broadly, it took on the name Bank of America. The Company established a significant presence during the 20th Century, becoming one of the country’s leading commercial banking entities.

In 1998 Bank of America was acquired by NationsBank of Charlotte, with the newly-merged company taking on the Bank of America brand. The Company is one of the largest banking groups in the world, ranked 26th in the Fortune 500 list and 11th in the Forbes Global 2000 list. Bank of America trades its shares on the New York Stock Exchange. It has a current market capitalisation of $161.03 billion.

Business model of Bank of America

Customer Segments

Bank of America provides a broad range of banking and financial services that are designed for a Variety of customer segments:

  • Consumer Banking, which provides services to general consumers and small businesses;
  • Global Wealth and Investment Management, which provides services to high-net-worth individuals and families, typically identified as those clients with more than $250,000 in total investable assets;
  • Global Banking, which serves middle-market companies, commercial real estate firms, auto dealerships, not-for-profit companies, large global corporations, financial institutions and leasing clients;
  • Global Markets, which provides services to institutional investor, commercial operators, and corporate entities; and
  • Legacy Assets and Servicing, which handles much of the Company’s mortgage business.
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Bank of America’s principal market is its native US. The Company, however, also serves customers across three geographic regions: Asia; Europe, Middle East, and Africa; and Latin America and the Caribbean.

Value Propositions

Bank of America provides value to its customers in the following ways:

  • Its reputation and industry standing, with the Company established as one of the largest and most recognisable banking brands in the world, with a trach record of providing quality, reliable services to its broad customer base;
  • Its broad domestic and global reach, with the Company operating a wide-reaching domestic sales and retail network in addition to having an established presence across Europe, Asia, the Middle East, Africa, and the Americas;
  • The accessibility of its services, with the Company providing services through a physical network of outlets, as well as through online, mobile and telephone banking channels;
  • The breadth of its product offerings, with the Company providing a varied suite of services designed to serve a broad spectrum of customers; and
  • Its expertise and technical experience, with the Company employing highly-trained and experienced personnel, and specialist staff members across its core business segments.

Channels

Bank of America operates a website at www.bankofamerica.com, through which it provides information on its products, services, and activities. The Company also operates an online banking channel, which enables customers to access certain consumer banking services and products through mobile and desktop browsers and mobile apps.

Bank of America additionally provides consumer banking services through a franchise network spanning 33 US states, including approximately 4,700 financial centres, 16,000 automated teller machines, and call centres. The Company also operates dedicated wealth management, global banking and global market teams that deal directly with institution, corporate, and high-net-worth clients, through offices in the US, as well as across Europe, the Middle East, Africa, Asia, and Latin America.

Customer Relationships

Bank of America provides a range of consumer and small business banking to customers on a self-service basis through its online and mobile banking platforms, through which customers can manage their accounts, move money, set up payments, and apply for banking products without interacting with members of the Bank of America sales team.

Much of the Company’s services are provided directly to consumers through its in-branch staff, who are able to provide a level of personal care to clients. Bank of America works closely with its commercial, institutional, and high-net-worth clients in order to provide a tailored service that both meets the client’s individual needs and follows the best course of action for their unique circumstances. The Company aims to establish long-term client relationships.

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Bank of America provides a range of online support resources, including FAQs and user guides, as well as learning resources that aim to teach consumers better financial habits. The Company also provides ongoing personal support to its customers over the phone, via email, and through online contact forms.

Customers, additionally, can interact directly with the Company through its social media accounts, including with Facebook, Twitter, LinkedIn, Instagram, Pinterest, and YouTube.

Key Activities

Bank of America is a bank and financial holding company. It provides various banking, investing, asset management, and financial and risk management products and services to consumers, small and middle-market businesses, institutional investors, corporations, and government bodies.

Its business is divided into five core operating segments: Consumer Banking, which provides credit, banking and investment products and services to consumers and small businesses; Global Wealth and Investment Management, which provides investment management, brokerage, banking and retirement products; Global Banking, which provides lending-related products and services, and treasury solutions; Global Markets, which offers sales and trading services; Legacy Assets and Servicing, which provides mortgage servicing activities. The Company’s other activities are organised into a sixth segment under the name Other.

Key Partners

Bank of America collaborates with a range of companies throughout the development and provision of its products and services. These partners include:

  • Academic and Education Partners, comprising education organisations and academic institutions that collaborate with the Company in providing various training and education programs;
  • Banking Partners, comprising a range of banking institutions and financial service providers that support the Company’s own services or provide services or products on its behalf;
  • Strategic and Alliance Partners, comprising a range of companies with which the Company shares resources and collaborates on joint-venture projects; and
  • Supplier Partners, comprising suppliers of tools, technology, and services that support that facilitate the Company’s products and services.
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Bank of America’s banking partners include its ATM Alliance Partners, which allow Bank of America customers to debit cards across a network of international automated teller machines.

Bank of America has recently established a partnership with Khan Academy to provide financial education programs, with Concur Technologies to market travel expense reporting services, with Visa Checkout to make online purchases easier for consumers.

Key Resources

Bank of America’s key resources are its financial resources, its physical network of branch outlets and financial centres – including its network of automated teller machines, its technology and communications infrastructure, its partnerships, and its personnel.

Bank of America operates around 4,700 financial centres across the US, supported by 16,000 automated teller machines, as well as number of international offices across Asia, Europe, Latin America, the Middle East, and Africa.

Cost Structure

Bank of America incurs costs in relation to the operation of its physical banking network, the maintenance of its technology and communications infrastructure, the implementation of marketing and advertising campaigns, the management of its partnerships, the payment of professional and banking fees, and the retention of its personnel.

In 2015 Bank of America accrued non-interest expenses in the amount of $57.19 billion, the majority of which related to the payment of salaries and benefits to its 213,000 full-time employees, which totalled $32.87 billion. The Company also accrued significant costs relating to occupancy and data processing, in the amount of $4.09 billion and $3.12 billion respectively, as well as paying substantial professional fees that totalled $2.26 billion.

Revenue Streams

Bank of America generates revenue through the provision of various banking and non-banking financial services to consumers, commercial entities, public institutions and high-net-worth individuals. The Company’s revenue is derived from various service fees and commissions.

In 2015 Bank of America generated $83.42 billion in annual revenue, down marginally in the $85.12 billion recorded by the Company in 2014. The Company’s Global Wealth and Investment Management segment is its largest revenue generators, accounting in 2015 for $18.00 billion in revenue. This was followed by the Global Banking, Global Markets, and Consumer Banking segments that generated $16.92 billion, $15.07 billion, and $14.22 billion respectively.

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