Like any other type of business, the Bank of America majorly focuses on financial services for profit-making. The second-largest bank in America also deals in multinational banking, making it an international bank that operates beyond the USA’s borders. Being the largest bank means the Bank of America leads in the market capitalization and bank holding.
You don’t need to be told that the bank is a choice for many people in the U.S and the world. The fact that there are hundreds of large chains of ATMs and banking centers makes it a more popular banking institution than any other.
This article is about SWOT analysis of one of the leading firms in the banking industry. We want to establish how, over the years, this giant bank has been able to remain consistent in service delivery and dominant in the financial sector. Is it because of the bank’s emphasis on continually analyzing and reviewing the SWOT analysis?
Well, maybe that has been the case.
But what is this SWOT analysis?
We could say it is a framework that makes it possible and easy for a specific organization to identify the internal strategic and external strategic factors carefully. The idea behind discovering these vital factors is to enable the bank to do a more comprehensive situational analysis.
For most companies, the SWOT strategic tool is a vital technique that comes in handy when there is a need to scrutinize the current Strength, Weakness, Opportunity and Threats. The SWOT analysis isn’t a one-day interaction that ends at analyzing the market trends.
The analysis is a more comprehensive and immensely interactive process that involves uninterrupted coordination from various departments within the bank. As earlier mentioned, the analysis involves all the departments and needs a more organized group for effective execution.
Further, the Bank of America SWOT analysis aims to unearth the many opportunities and threats that may bring the bank to its knees. It is important to note that the Bank of America began using its current name in 1998 after merging with NationsBank.
What is the value of this SWOT analysis?
The main aim is always to provide the bank with a clear roadmap on what to improve on and how to minimize the weaknesses. The weaknesses sometimes referred to as internal strategic factors, can bring the bank’s activities to a grinding halt if enough care isn’t taken.
The analysis also comes up with solutions to the external strategic factors through various branch and departmental managers. The external factors that comprise the bank’s opportunities and threats are essential in helping the bank develop a more comprehensive recovery plan.
Strengths of Bank of America
The Bank of America is a multinational financial institution with roots and branches in all the 50 states of the United States of America. The giant financial institution within the USA alone serves more than 67 million customers and small business operators. But more than the dominant presence in the United States of America, the bank also serves millions of consumers from more than 35 countries spread across other continents.
Winning Various Awards and Accolades Has Been A Major Area Of Strength for the Bank
As a multinational bank, the institution has majorly focused on providing quality services with unmatched financial packages. As a result, millions of people worldwide have invested their money and other properties in the bank, making it a number one choice for most customers around the world.
The Fortune magazine named the Bank of America one of the top 100 Best Companies to world for in February 2019. That was a shot in the arm for a financial institution trying to set base in almost all the countries in the world.
The same month of February saw the bank bag another prestigious accolade from the J.D. Power. The recognition, the highest in customer satisfaction by companies, further cemented the bank’s commitment to providing unwavering support to customer interaction and quality banking services delivery.
While the two awards may look negligible in the eyes of many people, they mean so much to a financial institution that has remained constant in providing top financial challenges amid insurmountable challenges.
It is also essential to note that the two awards are just among the many won by the bank in 2019.
Bank of America has total assets of $2.17 trillion, making it the second-largest financial institution in the U.S. In terms of private wealth management, the bank also comes second, after Merrill Wealth Management.
Weaknesses of Bank of America
Generally, weak points are areas where an organization can improve upon. When we talk about strategies, it means making some decisions that sometimes end up not being as effective. However, with the SWOT analysis, an organization can analyze and build on the weak links for strategic positioning.
The bank has been unable to counter the challenges posed by new entrants in the market. They have, therefore, lost several customers.
The company hasn’t been able to come up with a wide range of products for customers.
Financial planning has always been poorly done. Currently, the bank uses cash on non-important things.
The bank hasn’t been able to diversify its area of operation. It had failed in the past when it tried moving into other product segments.
The bank is still stuck in past technologies, making it very difficult to compete with other institutions that have put technology at their operations’ heart.
The bank is currently operating below the industry average profitability ratio.
Opportunities and Threats
Bank of America has continued to expand beyond the USA’s borders and into other countries worldwide. And the market penetration, characterized by the establishment of new branches, is one of the main reasons the bank has consistently grow and remained dominant.
Therefore, the bank’s market penetration is an opportunity to grow the financial powerhouse beyond the boundaries of the United States.
Some of the opportunities include:
· Expansion through market penetration
· Growth through diversity in products and product development.
· Reducing risks by exploring other products
The primary threat to Bank of America is the stiff competition from other similar financial institutions. The SWOT analysis states that this external factor can reduce the market share of the company.
· Other forms of threats include:
· Cyber insecurity and other security breaches related to mobile baking
· The severe effects of cryptocurrencies
Key points from the analysis
The above SWOT analysis comprehensively covers the challenges the bank faces in its daily operations. The identified strengths and weaknesses are not an alien concept in the banking industry.
There is room to turn the weaknesses into the bank’s operations cornerstone and make the opportunities count.