SWOT analysis of Bank of America (BofA)
This is a detailed SWOT analysis of Bank of America. 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. The bank 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, 2019).
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 (Bank of America Corporation, 2019). These are two just examples out of many awards won by Bank of America in 2019. The achieved award list in the year 2018 was also very extensive.
Bank of America is the second largest bank in the United States with total assets of $2.17 trillion (as of January 2019). 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 15,000 financial professionals and has $1.08 trillion in AUM (assets under management) (Selby-Green, 2018). Bank of America grew its revenue by 4 percent to $87 billion and increased earnings per share (EPS) by 5 percent to $1.56 in 2017. It processes millions of transactions daily for its customers and clients (Bank of America Corporation, 2019).
Diversity and inclusion in the workplace is also a good strength of Bank of America. 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
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 the bank increase its profits, many customers and clients are not happy about it (Sweet, 2018).
Bank of America has found itself mired in a number of controversies over the years. For instance, the bank 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 impacted on 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 during the next four years. The bank also plans to hire more than 5400 employees as part of the expansion (Keller, 2018).
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. 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, HSBC, 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: 17 March 2019
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 (2019) Who we are, available at: https://about.bankofamerica.com/en-us/who-we-are.html#fbid=J07uTn5NrPc (accessed 05 March 2019)
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)
Keller, L. (2018) Bank of America to Open 500 U.S. Branches, Expand Into Ohio, available at: https://www.bloomberg.com/news/articles/2018-02-26/bank-of-america-to-open-500-u-s-branches-push-into-ohio-retail (accessed 05 March 2019)
Selby-Green,M. (2018) The 15 biggest wealth managers in the world, available at: https://www.businessinsider.com/the-15-biggest-wealth-managers-in-the-world-2018-6?r=US&IR=T (accessed 15 March 2019)
Sweet, K. (2018) Bank of America: Earnings rise on higher interest rates, lower taxes, available at: https://eu.usatoday.com/story/money/2018/10/15/bank-america-earnings-rise-higher-interest-rates-lower-taxes/1651511002/ (accessed 15 March 2019)
Photo credit: Wall Street Journal
Author: Jo David
Jo David has years of 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.