In 2011 Bank of America was one out of 6,453 banks in operation, making the banking industry highly competitive (Mason). Banking services have been around for centuries and just about everyone who needs financial services already has them. Because of this, Bank of America needs to maintain a competitive edge over their rivals, so that they may lure customers away from their adversaries. There are many ways that it can do this; one way is to offer competitive rates and a variety of services. Another way it can differentiate itself is to offer services faster and more efficiently.
It can do this by investing in information technologies and information systems. Information systems are vital to the success of a banking entity, especially to Bank of America. Bank of America provides financial services for over twenty eight million households and over two million businesses. They would not be able to manage all of these customers without the use of their database systems. They also offer a variety of services to their customers so that they can be more interactive in their banking experience.
Information systems and services like ATM machines, internet banking, and smartphone applications provide valuable services to customers and allow Bank of America to maintain an advantage over its competitors. History Bank of America’s history stretches all the way back to July 5, 1784 when its earliest predecessor, the Massachusetts Bank, opened for business for the first time (Bank of America). At the time, it was one of only three commercial banks in existence and one of only two banks to receive a state charter.
In 1960 after thousands of mergers and acquisitions, the bank was named North Carolina National Bank (NCNB). In 1991, NCNB acquired C&S/Sovran of Atlanta and Norfolk, taking the name NationsBank (Bank of America). In 1998 NationsBank acquired the California based BankAmerica Corporation and a new name, Bank of America. This union began a new era in banking; it allowed customers to access funds outside of their home states and coast to coast (Bank of America). This also marked the corporation’s national debut.
In 2004 it acquired FleetBoston Financial Corporation and in 2009 it acquired Merrill Lynch which had international operations. Bank of America now has international presence that can be found from Beijing to London (Bank of America). Because Bank of America has served millions of customers throughout its history, it has “been quick to make use of all available technologies to create value and improve service” (Bank of America). In 1958 it launched a new credit card for consumers; credit cards had been around since the 20s, but limited to businesses or stores.
In 1966 it began licensing other banks to use their credit card, becoming the country’s first nationally accepted credit card. In as early as 1949, Bank of America partnered with Stanford Research Institution in the application of computers in banking. They were also early adopters of online banking, having the largest online customer base in the world (Bank of America). Bank of America’s rich history, dating back to early American history and adoption of technological advances has made it the success that it is today. Information Systems
The first system used by the organization and the one of the key components is the NCR Teradata. This system is described as “the warehouse serves as a single repository for information on more than 28 million households and 2 million businesses” (Duvall, 2003). This is the foundation of the information system and links to the other systems to provide information needed to ensure each component works. The primary function of this system is to manage and store the vast amount of raw data needed to effectively run a banking facility of this magnitude.
NCR is the actual company that owns the software used and Teradata is the size or space needed for the system, which is 600 gigabyte space. Teradata Relational Database Management System is the underlying foundation, which is based on the “NCR WorldMark™ 5100M MPP platform” (Carino Jr. & Jahnke, 2012). This system has made the process of linking an individual with their banking information anywhere in the world possible. It takes the information of an individual consumer or a business consumer and links all of their information to a single profile.
The profile is linked to a banking account number, and is monitored by the system for patterns. It houses checking, savings, auto, home, credit cards, and any other transactional data readily available to the patron. This is accomplished using three different types of warehousing called precision, discovery, and cross-functional. These are used to determine individual credit scores, banking and spending habits, geographical preferences, and risk management information.
The systems overall objective is to provide “access to detailed data for customer segmentation, clustering, and retention analysis as well as allowing more sophisticated analysis of the bank’s financial metrics” (Carino Jr. & Jahnke, 2012). This information is uploaded daily and is stored for 33 months internally and 12 months visibility to online systems (Kwan, 1996). The Payment Software System Tracking payments, making payments, and access to payment information is also a critical component of Bank of America.
This system is provided by Sun Microsystems, and is a fairly newly implemented component to Bank of America. This critical feature is complicated and must adhere to the regulations set forth by the Federal government. This is a Solaris UNIX base program called ISO 20022 XML, ran on a Java Composite Application Platform Suit (Java CAPS). This system is used to link to the NCR Teradata foundation and provide access to payment features, such as ATM, online billing, and any other purchasing needs to the consumer without going through redundant steps.
This increases the speed of usage and availability by the consumer (Morgan, 2007). Overall Banking Functions and Security The bulk of Bank of America’s financial security information and software needs are handled by a single entity, NCR. This company directly supplies all of the mobile banking needs, online software, ATM functionality, and most importantly security features. Security of your financial information is a critical element in selecting your banking needs. This is addressed with a system called NCR APTRA Software Security.
They system and its components are not readily available to the public for security reasons. It does however state that it has found a way to combat unauthorized coding and ad-hoc. The system is also linked to Solidcore Suite, which is another system provided by the company to add security to other banking functions. (NCR Corporation, 2011). Smartphones and Banking The evolution of banking has come a long way. No longer do people have to visit a bank or ATM to make financial transactions. Banking can now be done easily through the use of a Smartphone.
Smartphones have become very popular over the last several years, with more adults owning smartphones than simpler cellphones (Gahran, 2012). According to a CNN article, as of February 2012, forty-five percent of cell phone owners, owned smartphones. Smartphones are a multi-tool of sorts. Besides make phone calls, a smartphone owner can send texts and emails, take pictures, record video, surf the web, and thanks to the creation of mobile applications, can even do banking in the comfort of their living rooms. Bank of America provides mobile banking via smartphone applications for BlackBerry, iPhone, Android, and Windows Phones.
Through the applications, members can transfer funds, pay bills, check balances, find nearby bank locations and ATMs, and deposit checks with a newly added feature. Customers can now deposit checks by taking pictures of the front and back of a signed check. Funds will appear in their accounts quicker than if depositing using an ATM (BrothaTech, 2012). Because smartphones have become so prevalent, and security of personal information so vital, Bank of America ensures its customers’ security with the use of SiteKey and an optional SafePass.
SiteKey is a security feature which requires users to enroll their device before they can perform transactions. If SiteKey does not recognize a device, the customer will first be required to answer a challenge question, secondly they will verify their SiteKey image and title, and finally enter their password. SiteKey prevents unauthorized access to customers’ accounts and lowers risk of identity theft and fraud (Bank of America, 2012). Another option is SafePass. SafePass offers even more added security by sending members a six digit code to their mobile device.
Customers would then enter the code before completing their transaction. The code expires as soon as it is used and within ten minutes if not used. Bank of America has added more value with their option of mobile banking. Innovations like their smartphone application and mobile direct deposit allows customers to be more in control of their finances, with the added security of SiteKey and SafePass. ATM Bank of America provides 18,000 Automatic Teller Machines (ATM) at 6,233 domestic branch locations in thirty-six states in the United States.
ATM is used for during and after hour deposits, withdrawals and checking balances. With deposits, ATM lets Bank of America customers deposit cash, checks or money order at any time without using a deposit envelope or deposit slip. When a customer wants to deposit more than one check, ATM can accept up to ten checks at once time. With the deposit of cash, ATM can accept anywhere between twenty to forty bills. It automatically counts and displays the images of the check or money order that a customer deposited on the screen and on the receipt.
These Automatic Teller Machines also provide different non-English languages, such as Spanish, Chinese, Korean, French, Russian, and Portuguese (Bank of America, 2012). Debit Card Transactions When customers use debit card to pay for products or services, the card is being swiped. The magnetic stripe in the machine records the account number, bank routing number and PIN. They automatically route to the bank. This takes a few seconds for the bank to reply back to the terminal that the money is available in the customer’s account and will be transfer to the merchant’s account.
On the customer’s side, the process normally takes the bank 24-48 hours to complete the transactions. Customer Service The messaging infrastructure at Bank of America, based on Microsoft® Exchange Server 2003 e-mail messaging and collaboration software, supports approximately 300,000 employees and 320,000 mailboxes across five data centers in the United States. For site resilience, the bank runs 36 single copy clusters (SCC), with four active and two passive mailbox servers per cluster, with each cluster supporting about 14,000 mailboxes.
Because Bank of America must comply with federal regulations, it archives about 100,000 mailboxes for legal retention. For storage, Bank of America uses a dedicated, high-performance fiber-channel storage area network (SAN). Instead of using replication for disaster recovery, it relies locally on disk-to-disk copies in the storage system. For remote disaster recovery, it relies on tape backups that it ships to the location in need, which becomes more of a challenge as the system grows. With this configuration, Bank of America has been able to maintain 99. 999 percent, or five nines, availability.
As the infrastructure ages and demand increases, it recognizes that issues with the system will become more difficult to avoid. “I am very proud of the five-nine availability because we have been able to design the system with dedicated storage and an adequate capacity of storage and servers. We’ve been able to manage the CPU, but memory is becoming a problem because we are running on 32-bit machines,” explains Tagg. Employees mainly use the Microsoft Office Outlook® 2007 messaging and collaboration client, although some employees still use Office Outlook 2003.
Bank of America has also deployed Microsoft Office Communications Server 2007 R2 to 150,000 employee computers for instant messaging and presence. Market pressures and budgetary constraints kept Bank of America from fully deploying Exchange Server 2007, but the bank faces challenges with its current infrastructure that it must address. Bank of America would like to alleviate its server memory issues by moving to 64-bit servers, improve its high-availability and disaster-recovery solution, and make administration easier.
At Bayshore, the CRM system, which operates on a Windows 95 system, acts as a data mine fed by other banking applications, all of which operate on an IBM AS/400 server. Customer information from any number of sources is fed into this system, where it is processed into lead management information. For instance, Bayshore uses the Silverlake customer accounting system from banking software vendor Jack Henry & Associates to manage all information on loans, checking accounts and so on.
Silverlake interfaces with the CRM software, where basic account data becomes sales contact information. The bank also operates a customized application, called a Marketing Customer Information File (MCIF), which analyzes customers’ accounts to determine which ones are profitable and have further sales potential. MCIF also interfaces with the CRM system, which processes the information into lead management, so that when a bank employee contacts an existing customer, the employee can recommend the financial services appropriate for the customer’s needs.
This type of account scoring is becoming the cornerstone of financial services marketing and will soon feed both face-to-face, telemarketing and ATM-based financial service marketing programs (see “Banking Bonanza? ” this issue). Other types of bank data feed into the CRM system as well. According to Larry Hurwitz, CEO of Imimage Software, which implemented Bayshore’s CRM application, the bank uses a device known as a Lucent switch to dial out and retrieve credit information on a particular individual from Fair, Isaac, a company that provides credit-scoring services to the banking industry.
Credit information is quickly downloaded into GoldMine and appears as part of the customer’s profile. “With the Lucent switch, I can make sure your credit is clean while I’m talking with you,” says Hurwitz. Web Banking Bank of America has a great source of security when consumers use online banking. When logging onto the personal banking page, the web site is automatically secured, this can be seen at the web address, starting with https://. On the main page, Bank of America will ask for the consumer’s online banking ID and the location of where accounts were created.
Then the user needs to click LOG IN button. Bank of America will then ask for security questions, there are only three times that the user can answer the question correct. The Bank will block the online banking if the user gives the wrong answer by the fourth time. For more security, the bank will then ask for the user to verify their personal icon image then their passcode. Once the customer is logged in, they can use many options such as making payment online, transferring, requesting the higher limit for their credit card, personalize their own log in information, and asking for help online.
The Bank of America web site will automatically log out of the user’s online banking system when there is no activities going on the banking web page. Bank of America has one of the highest security online banking systems for international banks (Bank of America, 2012). Conclusion References Carino Jr. , F. , & Jahnke, M. (2012). Bank of America Case Study: The Information Currency Advantage. Retrieved from NCR/Teradata Parallel Systems: http://www. vldb. org Duvall, M. (2003, December 05). Bank of America: When Systems Don’t Merge.
Retrieved from eWeek: http://www. eweek. com Kwan, Y. H. (1996, August 27). A Case Study of Management Information System in Hong Kong Banking- How to Gain Competitive Edge. Hong Kong, China. Retrieved from http://hub. hku. hk/bitstream/10722/37282/1/FullText. pdf Morgan, T. P. (2007, October 7). Sun, Bank of America Beta Payment Processing on Solaris. Retrieved from IT Jungle: http://www. itjungle. com NCR Corporation. (2011). NCR APTRA Security. Retrieved from NCR: http://www. ncr. com Bank of America. (2012). Privacy & Security.