Bank of America: US and UK Operations, Products & Markets

Introduction: Domestic and UK Presence

Bank of America is a large corporate entity with a global presence. The purpose of this discussion is to explore the company's operations in the United States and the United Kingdom, identifying the full range of products the bank offers in both countries, and describing its market structure and competitive environment.

According to MultexInvestor, Bank of America became a corporation in 1968 and is headquartered in Charlotte, North Carolina. The company currently has facilities throughout the United States in states that include Virginia, North Carolina, the District of Columbia, Florida, New Mexico, Nevada, and Arizona (BAC Full Description). The company also operates in several locations in the United Kingdom, including London.

Bank of America is one of the largest financial institutions in the world and serves millions of customers each day in the United States. Although the company operates in the United Kingdom, its operations there are on a much smaller scale. In fact, the majority of the company's profits are generated domestically. Data from 2002 shows that Bank of America's net income from domestic operations makes up the largest share of total earnings, while net income from European operations accounts for only a small percentage. Similarly, the United Kingdom's asset exposure represents only a minor portion of the company's total assets.

MultexInvestor explains that the company's domestic and global operations consist of four segments: asset management, commercial and consumer banking, equity investment, and global corporate investment banking (BAC Full Description). This structure exists so that the needs of various clients can be met effectively. For instance, the needs of a corporation can differ greatly from those of a personal consumer — a corporation may require access to capital markets, while an individual consumer may only need a checking account. This four-part structure ensures that the needs of both types of client are addressed.

Organizational Structure

The company offers a wide array of services in the United States and the United Kingdom to personal consumers, small businesses, and corporations and institutions (BAC Full Description). Services provided to personal customers include student loans, mortgage loans, private bank services, retirement accounts, savings and checking accounts, and investment services (BAC Full Description).

Small business services offered by the company include retirement planning, Internet commerce, merchant services, lines of credit, payment services, credit cards, leasing services, payroll and tax services, SBA loans, and business certificates of deposit (BAC Full Description). The company's annual report underscores the importance of this segment:

"Small business is big business. We have the deepest small business penetration of any banking institution in the nation. Two million small businesses — one in every five — bank with us… small business net income grew by an impressive 18% in 2002, and deposits increased by nearly 7%." (Bank of America Annual Report)

Range of Products and Services

For corporations and institutions, the bank offers capital management, capital markets, and capital investment services (BAC Full Description). The annual report highlights that the bank's commercial banking services are of particular importance because the bank serves 90% of Fortune 500 companies (Bank of America Annual Report). The report also notes that the bank provides financial services to corporations and institutions with annual revenues ranging from $10 million to $500 million, and that the company provides real estate financing to commercial entities as well (Bank of America Annual Report).

According to the annual report, Bank of America is also notably innovative. Several new products and services were developed around this period, including:

Palm scanner — scans the palm to provide greater security for safety deposit vaults.

Digital check imaging — allows customers to access copies of checks through local banking centers or over the internet.

Smart Automatic Teller Machines — aids visually impaired customers with their banking needs.

Mini Check Cards — allows customers to place their check cards on their key chains for easy access.

Shortened mortgage loan application process — utilizes the company's banking network to link customers to specific products, reducing the time required to gain mortgage approval.

Core Bond — a service created for institutions and corporations that "lowers the cost of capital for corporate issuers and reduces costs for investors looking to purchase a portfolio of corporate bonds" (Bank of America Annual Report).

Incorporation of Six Sigma tools and skills — this adaptation has led the company to higher standards and improved management processes, and has also resulted in increased customer satisfaction (Bank of America Annual Report).

Conclusion

The company's domestic competition includes Wachovia and Chase Manhattan Bank. Around the time of this analysis, Wachovia had merged with First Union and was positioning itself to gain a greater portion of domestic market share. Competition in the United Kingdom includes the Bank of Wales, Bank of Ireland, Bank of Scotland, Citibank UK, and Bradford & Bingley International. Most of these banks offer comparable services and are well respected within the UK.

This discussion explored Bank of America's operations in the United States and the United Kingdom. The company operates across many states domestically and maintains a presence in select areas of the UK. The bank offers a broad range of products and services — from digital check imaging and personal checking accounts to capital markets access and real estate financing for commercial clients. The company is organized into four segments to serve diverse client needs, holds a leading position in the domestic market, and competes with several notable banks both in the United States and in the United Kingdom.