SWOT analysis of Bank of America (BofA)
This is a detailed SWOT analysis of Bank of America (BofA). It aims to analyse the strengths and the weaknesses of Bank of America. It also aims to explore the opportunities and the threats facing the bank. The Bank of America Corporation is an American multinational investment bank and financial services company. While the bank has a long history, the Bank of America brand was introduced in 1998 as a result of the merger of BankAmerica and NationsBank.
Strengths of Bank of America
Bank of America has presence in all 50 states of the United States of America, the District of Columbia, the U.S. Virgin Islands, and Puerto Rico. It serves approximately 67 million consumer and small business clients in the USA. It also has operations in more than 35 countries throughout Europe, the Middle East and Africa, Asia Pacific and the Americas and serves the majority of Fortune 500 companies around the world (Bank of America Corporation, 2022).
Achieving a number of prestigious awards and accolades has been a very good area of strength of Bank of America. For instance, the bank was named one of the “100 Best Companies to Work For” by Fortune magazine in February 2019. In the same month of the year 2019, it also received the highest recognition in customer satisfaction for retail banking advice in the J.D. Power 2019 U.S. Retail Banking Advice StudySM. These are two just examples out of many awards won by the bank in 2019. It is the recipient of the 2021 Executive Leadership Council Corporate Award and was named the 5th in Top Companies in the U.S. 2021 list by LinkedIn (Bank of America Corporation, 2022).
Bank of America is the second largest bank in the United States with total assets of $2.82 trillion (Norrestad, 2021). It is also the second largest private wealth management company in the world. Merrill Lynch Wealth Management, a division of Bank of America, employs over 19,000 financial professionals and has $2.75 trillion in AUM – assets under management (Wealth Management, 2022).
Bank of America processes millions of transactions daily for its customers and clients (Bank of America Corporation, 2022). This shows how massive its activities are. In addition, diversity and inclusion in the workplace is also one of its strengths. 50 percent of the company is now represented by women. Similarly, people from ethnic and minority backgrounds represent more than 45 percent of the U.S.-based workforce.
Weaknesses of Bank of America
An important component in the SWOT analysis of Bank of America (BofA) is the discussion on weaknesses. While Bank of America operates in more than 35 countries, it depends heavily on its home market (USA). This over-dependence may turn out to be problematic particularly, if financial turmoil erupts in the U.S. market.
Higher interest rate on loans charged by Bank of America has also been a problem. Although higher interest rates and lower corporate tax rates have helped it increase its profits, many customers and clients are not happy about it.
Bank of America has found itself mired in a number of controversies over the years. For instance, it was investigated by the state of Arizona in 2010 for misleading homeowners who expressed interests to modify their mortgage loans (Garofalo, 2012). It was also accused of obstructing the investigation.
Likewise, Parmalat SpA (an Italian dairy conglomerate) sued Bank of America for allegedly profiting from its knowledge of Parmalat’s financial difficulties. Bank of America agreed to pay Parmalat $100 million to resolve the issue (American City Business Journals, 2009). WikiLeaks Scandal has also affected the brand image of Bank of America very badly.
Opportunities for Bank of America
There are many growth opportunities that Bank of America can explore. For instance, expansion further into the U.S. market has enormous potential. In fact, the bank announced in early 2018 its plan to open 500 branches across the United States. Particularly, it is currently focusing on Los Angeles to increase its market share there.
Bank of America can expand into the digital space by improving its customer service, investing more in online banking, and mobile banking, and making the whole experience easier for customers. Similarly, by opening up branches near colleges and universities will help it increase its market share among younger people.
Expansion outside the U.S market is worth exploring. Likewise, introducing new services for customers and clients with the help of advanced Internet technology is also worth exploring. Innovative and exciting new services in the USA and abroad can be a huge opportunity for Bank of America.
Threats to Bank of America
Threat is the last element to address in the SWOT analysis of Bank of America (BofA). The bank faces threats from a number of very powerful competitors because of its operations in many countries and territories. The main competitors of Bank of America are UBS, Goldman Sachs, Citigroup, Wells Fargo, RBS, Deutsche Bank, Credit Suisse, and Morgan Stanley, and JPMorgan Chase.
Domestic and global recessions, financial losses, and credit issues may impact on Bank of America’s operations badly. Hacking, data loss, further probes, and controversies could also undermine customers’ confidence in Bank of America.
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Last update: 20 January 2022
American City Business Journals (2009) BofA settles with Parmalat for $100M, available at: https://www.bizjournals.com/charlotte/stories/2009/07/27/daily21.html (accessed 10 March 2019)
Bank of America Corporation (2022) Who we are, available at: https://about.bankofamerica.com/en-us/who-we-are.html#fbid=J07uTn5NrPc (accessed 20 January 2022)
Garofalo, P. (2012) Bank of America’s Offer To Homeowners: We’ll Modify Loans If You’ll Erase All The Mean Things Said About Us On Twitter, available at: https://thinkprogress.org/bank-of-americas-offer-to-homeowners-we-ll-modify-loans-if-you-ll-erase-all-the-mean-things-said-6b96f785445c/ (accessed 10 March 2019)
Norrestad, F. (2021) Total assets of Bank of America, available at: https://www.statista.com/statistics/249605/bank-of-america-total-assets-at-year-end/ (accessed 19 January 2022)
Wealth Management (2022) Merrill Lynch, available at: https://www.wealthmanagement.com/companies/merrill-lynch (accessed 19 January 2022)
Photo credit: Wall Street Journal
Author: Joe David
Joe David has years of teaching experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality, and tourism management. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.