Marwa Atoui

This case is illustrating how top managers should take major decisions to differentiate themselves from their competitors and to succeed in keeping their current customers and attracting new ones through concurrent innovation to offer them additional services that would meet or surpass their expectations. In this case, the managers of Bank of America, Macdonald and Brown, were met with Carrel, a senior manager at Starcom agency to discuss how would they develop their banking mobile app in the light of continuous development of similar apps by the Bank’s competitors; which would seriously threaten the Bank’s market share through encourage its customers to move to other banks and benefit from their provided services through updated mobile apps.

Bank of America has become the largest bank among the 6,911 U.S. banking institutions, covering almost 82% of the U.S. population or 53 million U.S. customers. The number of U.S. operating banks decreased from 14,628 in 1975 given the increased merge and acquisitions activities that were encouraged by the FDIC to increase the capital of the U.S. financial institutions and enhance their tolerance towards loss absorbance capability and their ability to manage their different types of risks. The 2008-2009 subprime mortgage crisis initiated serious threats on some U.S. financial institutions as the general economic situation decelerated and went into a deep recession; while this incident provided other institutions with opportunities to differentiate themselves through providing innovative products and services to their customers at convenient costs. This turmoil has seriously affected Bank of America as he suffered from a large loss in the fourth quarter of 2008, after the acquisition of Merrill Lynch, which urged the U.S. government to accept the grant of $ 20 billion to support the U.S. financial market, despite the fact that Bank of America could absorb this loss without the government intervention. This incident severely affected the reputation of the Bank among the U.S. customers, as experiencing a tough financial situation due to this crisis, which led to the replacement of the Bank CEO.  

The mobile banking application was first introduced in 2007, where banks retrieved this invention as an opportunity to differentiate themselves from competitors, as this application were highly acceptable by customers as it is a tool to check their banking operations at lower costs than traditional banking channels; especially with the continuous technological developments that could facilitate the delivery of such application to most customers; as their number reached 10 million in 2012, and was expected to increase at a great proportion to reach 37 million by 2014. The initiation of the mobile application by the Bank of America in 2007, were highly accepted by a large number of the Bank’s customers who valued this new service and considered it as having great benefits for them and satisfying their needs at minimal costs.