SWOT Analysis of Bank of America

Introduction 

Swot analysis of Bank of America. The Bank of America Corporation is a multinational financial service holding and investment banking company. Hugh McColl and Amadeo Giannini were the founders of Bank of America, and they laid the foundation of the financial institution in 1998. It came into existence when NationsBank acquired the BankAmerica. The headquarters of the bank are in Charlotte, North Carolina, and New York, USA.

The Bank of America’s main products and services are credit card, wealth management, private equity, private banking, mortgage loans, investment banking, insurance, corporate banking, and consumer banking.

According to an estimate, the annual revenue of the Bank of America in March 2021 was 91.073 billion dollars, and it has decreased by 18.73%. Out of which, the net income of the financial institution was 20.492 billion dollars, and it has reduced by 9.61%. However, the banking company has employed more than 213,000 employees to manage its worldwide operations.

The Bank of America’s top competitors is Wells Fargo, Citigroup, JPMorgan Chase, Royal Bank of Scotland, Standard Chartered Bank, National Australia Bank, HSBC, Deutsche Bank, China Construction Bank, and BNP Paribas.

Today, we’ll discuss the swot analysis of Bank of America. It’s going to analyze the internal and external factors impacting the world’s leading financial institutions. Here’s the swot analysis of Bank of America as follows;

Strengths of Bank of America 

Global Presence

According to an estimate, the Bank of America is offering products and services in more than 35 countries worldwide outside of the US territory. The company made an annual profit of approximately 3.5 billion dollars in 2020 from its global lending products/services.

However, the Investment Management and Global Wealth division and the Global Marketing division have generated a net profit of 3.1 billion and 5.2 billion dollars. It has increased approximately 50% since 2019.

Brand Identity

The Bank of America has established strong brand identity with the mission of empowering the consumers. Now, the bank’s tagline is “what would you like the power to do?” The chief marketing officer of the company, Meredith Verdone said that the company plans to make a difference in the world by solving global complicated issues.

Reputation

The Bank of America has established a strong brand reputation and a loyal database of customers. The bank has won many awards over the years. For instance, Fortune magazine nominated the Bank of America for four consecutive years in its list of “Change the World.” The bank also made the list of “100 Best Companies to Work for” for 2 years.

Innovation & Service

The Bank of America is one of the top innovative products/services banks because it offers different products and services relevant to the customers’ needs. In fact, Fortune magazine nominated the company as the “Most innovative Bank in North America” in 2020.

The bank has an excellent service portfolio and it has clients in over 150 countries across the globe.

Stable Growth

Besides the decline of annual revenue and net income in 2020 due to the pandemic of covid-19, the Bank of America has had a stable increasing growth for the past few years. The stable growth rate attracts the trust of customers and investors.

Brand Value

According to an estimate by Forbes, the market capitalization of the Bank of America in 2021 is 329.5 billion dollars. It ranks at the 74th position of America’s Best Bank in 2021 and at the 12th position of Just Companies 2021. However, the bank ranked at the 49th position of the World’s Most Valuable Brand in 2020.

Weaknesses of Bank of America 

Controversy & Lawsuits

BoA paid approximately 16.65 billion dollars settlement money in 2014 that the bank hadn’t disclosed the repurchase mortgage cost. It was actually the part of the Residential Mortgage-Backed Security working and Financial Fraud Endorsement Task Force of Obama.

BoA had to deal with a lot of customer claim lawsuits in 2009 that the bank processed transactions in such a way that it resulted in the form of hundreds of dollars of fees on every individual.

Christopher filed a class-action lawsuit against the Bank of America in early 2021 claiming that the company didn’t protect thousands of unemployment benefits accounts. His report mentioned the unauthorized changes in his account, and the bank said that it froze the accounts and returned the balance to the unemployment department of California.

Increasing Cost due to Covid-19

The BoA’s service cost increased to a great extent during the pandemic of covid-19. The CEO and Chairman of the bank, Brian Moynihan said that the bank is investing a lot of resources to serve the customers better. Paul Donofrio (CFO) said that the bank had to process a plethora of unemployment insurance claims in order to meet the cost of Protection Program loans.

Opportunities available to Bank of America 

Sustainable Finances

BoA plans to invest approximately 1 trillion dollars in green finance initiatives and environmental business by the end of 2030. The bank initiated the project in 2019 by allocating 300 billion dollars. However, the goal is to proliferate the growth of the green economy by offering funds to sustainable businesses.

The bank also agrees with the terms of the Paris Climate Agreement and it plans to achieve zero greenhouse gas emission in its supply chain and financial operations by the end of 2050.

Merger & Acquisition

The Bank of America came into existence through the merger and acquisition of NationsBank and BankAmerica in 1998. It merged with FleetBoston Financial in 2004, MBNA in 2005, The US Trust Company in 2006, LaSalle Bank in 2007, and many other acquisitions and mergers over the years. The bank should keep following the same pattern of merging and acquiring, it would help the company to expand its market and influence.

Virtual Assistance

Ever since BoA started offering AI virtual assistance to its customers, the bank’s users have reached 1 million within 2 months. The program’s name is Erica and it follows the natural language and predictive analysis when it interacts with customers.

Erica helped a lot of people during the period of the pandemic of covid-19. People used to consider AI applications an additional feature before the pandemic. But after the pandemic, it has made people realize the significance of digital banking. The bank is still working on the efficiency of the virtual assistance features.

Credit Card Value

The growth and value of credit cards and online banking are increasing among customers. BoA is already offering these services. Now the bank should go one step ahead and be more efficient in such services, it would help the financial company to differentiate its services from the competitors.

Portfolio Expansion

BoA should consider diversifying and expanding its product and service portfolio. The investment in the growth of sustainable businesses is a great step for the company towards diversification. It would help the financial institution to minimize the risk.

Threats Bank of America has to face 

Economic Recession

According to a report by World Bank, many banks across the globe have been facing a non-performing loan crisis during the pandemic period. They aren’t ready to deal with such issues and how to manage them on the balance sheet.

On the other hand, the governments are also going through a difficult phase and incapable of further stimulating the growth of the banking industry. According to a report by Financial Reserves, the political conflict and restrictions make it difficult for the government to provide financial assistance.  

Security Breach

BoA had a security breach in April 2020 and it compromised the information of the Paycheck Protection Program of the bank. It’s not the first time, a hacker group named Par: AnoIA hacked the bank’s database in 2013 and accessed the bank’s executive data. They sold the bank’s information on the dark web according to Bloomberg 2019.

Ever since BoA has started offering online and internet banking services to customers. The company has become more vulnerable to cybersecurity issues. It’s sending a weak and insecure image of the company.

Conclusion: Bank of America Swot analysis 

After an in-depth study of the swot analysis of Bank of America, we have concluded that the Bank of America is indeed the world’s leading financial institution. The data security breaches, economic crisis, increasing costs, and controversies are some of the main challenges. BoA should utilize its resources to expand its portfolio and market.