Pan Boricua

Jen McDonald – Head, Digital Marketing Group, BoA
Douglas Brown – SVP, Mobile Product Development, Starcom
David Carrel – SVP, Strategy and Analysis, Starcom
Kenneth Lewis – CEO, BoA, 2001 – 2010
Brian Moynihan – CEO, BoA, 2010 – present
Mark Hendrix – VP, Digital Marketing, Mobile
Jamie LaRose – VP, Digital Marketing, Email and Mobile
Matt Burgener – SVP, Digital Marketing, Onsite and ATM
Kathryn Condon – SVP, Digital Marketing
Christopher Smith – SVP, Digital Marketing, SEO and Social

Current: Mobile App on Smartphones, Mobile Web
3 months: SMS
4mn customers in 3 yrs. Adoption rate ~ 5-8 times of online banking
LoB Managers: specialized apps (responsible for own business profitability.

Add features: Cons - slow down, complexity, affect user experience (already examples of failures)
HUGE RISK, are people ready to fix mortgages and credit cards on mobile devices? Trust, human touch (behavior thru habit)
DIFFERENTIATOR – Citi has already merged credit info.

Different apps: Citi and Wells Fargo, CUSTOMIZED SOLUTION
Cons: reprioritizing resources, OPPORTUNITY COST?

OVERALL GROWTH OF BOA AND THE ENTIRE FINANCIAL SERVICES INDUSTRY.

FSI: fragmented, thousands of banks, #banks on the decline, oligopolized, 10 top players have 46.4% deposits HHI?
BoA #1
Subprime crisis: credit frozen, consumers and banks reduced spending, PAIN to BoA due to size of biz
Crisis: Boon or Bain?
Offer freebies to earn customer loyalty?(cross sell) Or go traditional way?

Bank of America: so far acquisitions all the way
82% US markets covered (population), 53mn customers
#1 in 23/30 metro areas, 6000 banking centers, 18000 ATMs
#1 mobile, online, mortgage, GWM: $1.8tn assets, IB: #2 debt and equity raised (2008)
2008 rev up 9% net income down 73%
2009 rev 119bn, NI 6.2bn
2008 250k emp

IMAGE: strong and infallible, tarnished by federal inputs
Lowest stock price
Lewis: lack of transparency
BM: prev head of consumer and small business, would know LoB managers needs and dilemmas.

US Mobile Banking Market:
[2007] extended online, ADD: access on the move.
Differentiate banks, ENGAGE customers -> income + retention?
Costs: Initial Capital, OpEx
CPT $0.10 in 2009 -> $0.03-$0.04 when??
Online $0.03 - $0.04, IVR $0.13, CC $0.39, ATM $0.16, Branch Execs: $1.34

m-banking: messaging, internet, apps messaging: check balances, text alerts regarding a\c activity, deposits, transfers
Add: across all wireless operators, no software
Cons: limited, 140-160 chars

m-web:
WAP, effectively connected users to online website
Pros: easiest (already site)
Cons: data plan, slow browser speed, small screens (optimizing display for mobile device) m.boa.com

Apps:
Thru smartphones
Pros: richer experience, optimized user interface (ENGAGE), locate bank branches and ATMs (GPS – feel to see location on map, but customers still GO TO THE BRANCHES!)
Cons: development costs (combo of devices, OS, networks, 40k to 500k)
Smartphones: 10% to 46% of total US m phone market 2008 – 2012.

MS and CA
Customers (mb):
2009 – 10mn
2014E – 37mn (30% of total expected online bankers – 123.33mn)

Annual TX (mb)
2008 – 180mn to 2014E – 2.4bn

Reason: improve in m devices, networks, better features, incr awareness

2009 survey (online registration)
Sample 500
300 interested in mb w/o signup ( at least one service)

Preferred
Mobile 1%
Online 25%
Branches 21%
ATM 17%
Limited value, security, cost of data access.

Mobile Payments (expanding in US)
Local m payments: Bluetooth (RFID) Infrared, NFC
Pros: Substitute debit/credit cards, save receipt signing, punching pins [2009 – early stages of dev]

m commerce no physical proximity, thru sms also, providers putting links of shopping services, use mobile phone no instead of credit card.
Costs added to mobile bill.
MSPs retained 30-40% of txn amt.
Emergence of new players, strat agr with MSPs and merchants
US market (virtual goods) 2009 – 677mn to 2014 – 2bn
Expected: m commerce grow to larger bill amounts (would you include that in your bill, how safe is this, anyone could have mobile nos, are there pins?)

P2P payments:
Paypal, send to another person
78mn active accounts in 190 markets, 19 currencies [2009]
Pros: no regulations, but till WHEN? PP allow m connectivity (check, shop, bid, send)
2008 rev 2.4bn [25% inc] TXV 60mn [27% yoy]
9% of global e comm. And 15% US e comm. thru pp
Emergence of new players
Global remittance market (fund transfer nationally and internationally, commission)
300mn flow from devd to devl countr
0% to 1% by 2014. (growth rate of mkt?)
2008 voda-WUMT

Poor population around the word: (no bank accounts)
Customers: access to BFI
Operators: cut, new revenue streams
BFIs: new market 1.5bn unbanked, 3bn underbanked

32mobiles/sec: rapid adoption
Unprecedented experience, ENGAGE, build brand, increase customer satisfaction, retention? (really?)
Potential to reduce costs by reducing #call centres?
Start with small and richer customers [2-2.5 yrs] experienced, #1, time to go for all??

Exogenous factor: iPhone launch in 2007 helped adoption.
1yr: 1mn; I banking app in 2008
FQ 2009: 2mn; TQ 2009: 3mn; Jan 2010: 4mn [859 handsets]

a/c bal: 99% txn lev: 90%
15mn loc searches, $10bn movement (cut?)
35% mkt share
Debit cardholders, low balance check, but how useful was this check? No revenue from this? What amt of txn with debit card? Cut?

Imp:
X-treme: 24%
Somewhat: 33%
Incr in satis: 76% (due to mb)
Likelihood of referring etc favorable

POTENTIAL COST REDUCTION, CUSTOMER SATISFACTION, LOYALTY

Lessons from ob:
Cut costs by migrating cust from br to site.
NO FEES.
Burden: signing up, entering all payment info
Confusion regarding CONTROL (behavorial change required)
Increase awareness, level of consumer comfort
30mn online users by 2009
Retainer: once details entered, less likely to switch (REALLY?)

Online helped in channel switch (change triggered, need to cash, highest incremental benefit to bank)

Smartphones: 15% of mobile users of BoA
SMS: increase reach and costs (pay operator for each sms)
ADD one more channel, Challenge: Integration with other channels, track txn, security, customer trust

Mobile Marketing:
Balance between customer service and promotion (intimate channel) EXPERIENCE m-mark [2008] ad: sms (spcl offers, loc based mktg, interactive campaigns, display ads) mobile used as part of INTEGRATED MULTIPLE CHANNEL CAMPAIGNS very effective, much higher click thru rate than email ( 5 to 6 times higher than channel avg)
NOVELTY, cust expect msgs
ENGAGEMENT YES, CONVERSION ?
M mark budget doubled in 2010, still <5% of digi mktg

Online marketing
Heavy user, search and disp ad, videos, in game app, email
Top 20 advertisers in ind, top client of google
Past: budget mostly to lead generation and customer acquisition
Now: more on graphical display ads for integrated programs
RETAIN TRUST (current mkt situation)

CPM
Mobile 10-12
Online 5-15
Video 20-25
Effectiveness (different measures)

Onsite marketing
GET THE RIGHT MESSAGE TO THE RIGHT PEOPLE
Educate customers, low variable cost, challenge: effective/optimum channel usage (not more not less)

Social Media
Balance with conservative culture of large bank
Experiments with fb, yt, li, tw
Risk averse culture: is not going here a risk?
Discovery [2009] estd fb and tw platforms
Customer service: limits, grievance handling, closer interaction with associate (attend more customers than at branches)
Security and regulations

WITHIN THE CULTURE AND CONTEXT OF A LARGE BANK
BOA NOT IMMUNE FROM THE TAINT OF FINANCIAL CRISIS
MOBILE BANKING MARKET EVOLVING VERY RAPIDLY