Customer Value Assessment for Bank of America - Case Study Example

Case Analysis: Bank of America Case Analysis: Bank of America Introduction The Bank of America (BOA) is a leading commercial bank in the United States(Weinstein, Clasen, Lorenzo, & Roberson, 2014). Founded in 1904, the bank operates in the US and many countries around the world, with their headquarters in Charlotte, North Carolina. Thus, the bank is a multinational banking corporation. Currently, the bank employs about 267,000 people. Brian Moyniham is the current Chief Executive Officer of the bank. BOA is a leading financial institution in America’s Small Business Administration (SBA) program. They provide an extensive range of financial services to small and large enterprises alike. This paper analyzes the organizational and customer value situation of the bank with a view to making strategic proposals for improvement. Organizational Analysis The fact that BOA is a multinational corporation operating in several countries of the world gives them the upper hand over their competitors who have no global footprint. BOA’s global presence opens doors for unbounded opportunities for the bank to grow their revenues and profits(Degryse & Ongena, 2002). However, the global presence of the bank poses formidable challenges to the corporation. One of these challenges is to be found in the area of human resources. The bank must comply with the specific labor laws of every country where they operate. This is a daunting task with serious implications on the banks resources. Compliance with employment laws can be even more demanding where a country is divided into regions or states, and each has their labour laws(Degryse & Ongena, 2002). For example, each of the fifty or so states of the United States has their laws that govern employment. The bank must comply with the laws of all these states. Not doing so could result in legal suits that could cost the corporation a lot of money. Besides labor laws, the bank must comply with the taxation requirements of all the countries where they operate. Again, this is a demanding task that if not well managed could cost the corporation. Compared to two of their majorcompetitors, namely J.P. Morgan Chase Bank and Federal Credit Union (CFE), BOA is quite competitive. The main source of this competitive edge, though narrow, is the ban’s charges compared to what their rivals charge(Weinstein, Clasen, Lorenzo, & Roberson, 2014). For instance, with respect to a 48-month, car loan, BOA charges interest at the rate of 2.24% against Chase Bank’s 2.33% and CFE’s 3.35%. While this difference might appear marginally, it makes all the difference in a competitive environment with price-sensitive consumers. The bank should strive to make their products and services more affordable relative to their competitors if they are to remain competitive. The bank’s active involvement in the SBA program gives them the upper hand relative to their rivals who are not involved in the program. The world over, small and medium enterprise are recognized as the drivers of economies(Degryse & Ongena, 2002). SMEs contribute more to GDP and create more employment opportunities than large corporations. Also, SMEs have been proven to be resilient in hard economic times than big businesses. On the flipside, SMEs constitute a significant risk to BOA given their limited collateral base and brief history. The implication is that the bank must invest more in highly qualified and experienced credit officers in order to minimize the incidence of loan defaulters. There are a number of things BOA can do to improve its revenues and profits. First, prior to entering any market, the bank should carefully analyze and understand the labor and taxation laws of the country. Where these are too costly to comply with,the bank might as well avoid venturing there. Secondly, BOA should regularly review the prices of their services and products to remain competitive. However, this effort must be accompanied by a consistent improvement of the quality of services and products provided. Thirdly, the bank should invest in hiring and retaining highly qualified and experienced credit officers to help reduce the rate of loan defaulters in their SME portfolio. Customer Value Analysis For some time now, BOA has been struggling with customer satisfaction(Weinstein, Clasen, Lorenzo, & Roberson, 2014). In fact, of the four areas of customer value assessment, service scores the lowest. For instance, BOA has a bad reputation for taking too long to resolve the simplest of issues raised by customers. It is little wonder that BOA rated very poorly according to the American Customer Satisfaction Index in 2012. This is despite the fact that all the employees of BOA, not just those in the customer care department, are trained in customer service. This could indicate that the customer service training program could be ineffective. Overall, the customers of BOA are satisfied with the quality of the bank’sproducts (Weinstein, Clasen, Lorenzo, & Roberson, 2014). Many of BOA’s customers believe the bank is genuinely committed to getting things done the right way right from the start. On quality, BOA stands on the same footing as their major competitor, J. P. Morgan. However, the bank could lag behind local credit unions that have been growing their market shares in recent years, thanks to quality innovative products. The implication is that the bank must not sit on their laurels. Instead, they must continuously innovate to improve the quality of their product offerings. Starting the 2009 bank bailout by the government, many Americans have developed distrust for the banking industry(Weinstein, Clasen, Lorenzo, & Roberson, 2014). Despite this fact, BOA seems to enjoy a fairly good image, its low customer satisfaction ratings notwithstanding. For instance, many former and current employees are proud to have BOA feature on their resumes. Many employees of the bank believe that BOA lives up to their promise of embracing diversity. However, there is a general feeling among BOA’s customers and employees alike, that the bank recognizes neither the best employees nor long-standing customers. This does not auger well for the image of the bank. The main source of dissatisfaction among BOA’s customers is their high charges(Weinstein, Clasen, Lorenzo, & Roberson, 2014). As a result, many people refer Chase Bank as a better provider of banking services. In addition, the American Customer Satisfaction Index reported that consumers of banking services were shifting to credit unions in large numbers. These offer better rates. BOA has embraced the latest technologies in banking in banking, including Internet and mobile banking. Unfortunately, according to many of BOA’s customers, these platforms have served to increase the costs of banking with BOA. Moreover, the bank is doing very little to enhance the quality of their products. This brief analysis has some implications for the bank. First, BOA must review its customer care training program with a view to enhancing its effectiveness and making it more responsive to customer needs. Secondly, the bank must seek ways to consistently bolster the quality of the products they offer. Or else, within a very short period, the bank could lose their customers to local credit unions that are continually innovating while offering lower prices. Thirdly, while improving the quality of their products and services, BOA must also lower their rates. Finally, must safeguard the relatively good image they currently enjoy. The starting point is to appreciate their best staff and loyal customers. Conclusion BOA is no doubt a leading player, not just in the American banking industry, but also in the global arena. The global presence of the bank presents a bag of mixed fortunes. The bank must capitalize on the advantages the global market presents while taking measures to mitigate the shortcomings of being a multinational corporation. At the same time, BOA must work to improve their customer value situation to create the greatest value for their customers at the least cost. This will call for innovation while keeping an eye on the prices of products. If well implemented, the recommendations contained in this analysis will propel the bank to greater heights. References Degryse, H., & Ongena, S. (2002). Bank-Firm Relationships and International Banking Markets. International Journal of the Economics of Business, 9(3), 401-417. Weinstein , A., Clasen , W., Lorenzo, E., & Roberson , E. (2014). 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