Bank of America is the second largest bank in terms of assets, just behind JPMorgan Chase, according to the data released by Federal Reserve in June, 2015.
Bank of America, which had been the largest bank in the nation since it acquired Merrill Lynch in 2009, relegated to the second spot only in the last quarter of 2011. This happened due to the simultaneous phenomena of its shrinking assets and Chase’s growing assets.
As a result, while JPMorgan Chase is ranked 6th in the Forbes’ list of world’s largest companies, Bank of America has to contend with the 23rd position.
According to FDIC, Bank of America operates 4846 locations in 35 states, with the largest concentration of branches in California, Florida, Texas, New York, New Jersey, and Massachusetts.
A few years ago, B of A had around 6,000 branches across the nation, but now the number of branches has gone down well under the 5,000 mark. According to a report, this has been a general trend among big banks with the exception of Wells Fargo, which is the only bank with over 6,000 brick-and-mortar branches today.
There can be several reasons why Bank of America has chosen to downsize and cut cost.
The acquisition of Countrywide Financial in 2008 exposed it to the risky home loans that characterized the financial crisis. This resulted into huge losses, much more than other banks, during the financial crisis. The bank sought to close branches, cut jobs, and reduce annual expenses to become more focused and profitable.
It has been the subject of the largest civil settlement in American history. The Department of Justice made it pay $16.65 billion in 2014, charging it with various financial frauds that have been committed before the beginning of and during the financial crisis. Interestingly, Bank of America has faced about $91.2 billion in legal fines and settlements since 2008, the year when it acquired Countrywide Financial.
According to a report, the bank’s workforce has been declined by nearly 16%, helping it cut down the operating cost and make up the losses due to legal fines and settlements. The number of ATMs has also dropped by 2% in the past two years.
It is not just an attempt to cut down the cost, but to respond to the changing behavior of the customers.
This is what the CEO Brian Moynihan has been reported as quoting.
“We are moving because customers are moving in how they conduct business”
The bank has indeed noted a 100% growth in the number of mobile banking customers in the past four years.
According to the report, the bank now has about 17 million customers who prefer mobile banking to branch banking. According to the same report, about 13% of the bank’s checks are now deposited via mobile.
Keynote, a company that publishes scorecards on the most important online sectors of the financial services industry, has placed Bank of America among the top providers of mobile banking services.
The criteria taken into consideration for the ranking include functionality, ease of use, privacy & security, and quality & availability.
Keynote also surveyed top financial services providers and ranked Bank of America at second place for credit card services and fourth for mortgage services.
Bank of America Financial Services
Moving on to the financial services, we have surveyed Bank of America online to find the following consumer lending options.
Bank of America Home Loans
The mortgage unit of the bank is referred to as Bank of America Home Loans, which is nothing but the erstwhile Countrywide Financial that was once the largest mortgage lender in the nation. Among the major services on offer include mortgage loans, mortgage refinance loans and home equity loans. Besides, the unit also maintains a loan servicing portfolio.
Bank of America is a leading originator of mortgage loans, offering a wide range of home finance options, including fixed-rate mortgages, ARMs, Jumbo loans and FHA & VA loans. To apply for a mortgage loan, one needs the following documents.
Borrowers can also lock in the interest rate and seek a reduction in mortgage origination fee. Online application begins by sending mortgage prequalification request through the bank’s secure website.
Bank of America mortgage refinance programs include 30-, 20-, and 15-year fixed-rate mortgage refinance as well as options like fixed-rate interest-only loans, jumbo loans, and combination loans. To apply for a refinance loan, borrowers need to produce most recent monthly statement for their mortgages instead of a copy of the signed purchase and sales agreement.
A home equity line of credit or cash-out refinance can be ideal alternatives to personal loans. The HELOC program at Bank of America comes with features like tax-deductible interests, no application fee or closing costs, rate discounts, convenient access to funds, and fixed-rate loan options. The discounts on interest rates are offered through programs like automatic payments, preferred rewards clients, and initial draw.
Mortgage Complaints – A Review
The mortgage-related complaints have come down in 2015 and Bank of America is no longer the lender with the largest number of complaints. According to CFPB data, B of A received 4508 complaints as against 4987 complaints from Wells Fargo customers and 4673 complaints from Ocwen customers. Fixed-rate mortgages, Adjustable-rate mortgages and FHA loans are among the most reviewed home loan types.
What caused borrowers to complain about Bank of America mortgage services? Taking a look at the data released by CFPB at the end of 2015, we can easily name some major issues. These include loan modification, debt collection, foreclosure, loan servicing, mortgage payments, and escrow account. These issues are about 80% of the total mortgage complaints. Among the other 20% include issues related with application, loan origination, mortgage broker, settlement process & costs, credit decision and underwriting, etc.
Here is how a borrower faced issues with mortgage payments.
Here is another customer complaining about the mortgage modification program of the bank.
Auto Loans are the major loan options made available by Bank of America consumer lending department. As the bank is no longer interested in sub-prime lending, it is hard to find an offer of Bank of America unsecured personal loan, bad credit loan or even a student loan. Personal loan seeker may find a good alternative in Bank of America credit cards that come with no annual fee and 0% APR.
The vehicle loans can be used to buy a new or used car. Borrowers can also get a loan to refinance their existing cars. Currently, Bank of America offers three types of auto loans – dealer purchases, refinance and lease buyout.
Consumer Loan Complaints – A Review
Consumer loan complaints are only about 1.5 percent of the total complaints received in 2015. As Vehicles loans comprise the largest part of consumer loans, the complaints related to these will obviously be more in number. However, the CFPB data also includes an almost equal number of complaints related to personal installment loans. Among the other important consumer loans include the personal line of credit with about 8% of the total consumer loan complaints.
So, what seems to be most important reason for consumer dissatisfaction? About half of the complaints have raised questions about the management (or mismanagement) of loans or lease. About 20% of the borrowers are reported to have faced problems while seeking help when they are unable to pay the debts. Others have complained about the problems they face when they take out or shop for the loan or lease.
Here is a review of Bank of America car loan by a customer, reacting on late reply by the customer service representative and a comparatively higher interest rate charged by the bank.
Revolving Personal Credit Options
While a home equity line of credit is useful for a homeowner who have built significant equity, a personal line of credit may be helpful for almost anybody. Unfortunately, it is a very hard thing to get a Bank of America unsecured personal loan or line of credit. This is where a credit card plays a vital role for people in need of urgent cash.
Among the range of credit cards available at Bank of America include cash rewards, travel & airline rewards, low interest rate, credit building, no annual fee, and student credit cards. Here are the details of one of the most popular credit cards at Bank of America.
The above card has no annual fee and offers 0% introductory APR on purchases based on billing cycles. This can be an ideal alternative to an unsecured personal loan. Here is how a customer has reviewed this card.
Credit Card Complaints – A Review
About 17 percent of the total Bank of America complaints are related to the credit cards. Among the major causes of customer dissatisfaction include billing disputes and the bank’s inability to keep a check on identity theft, fraud and embezzlement. Other important issues include closing or canceling account, delinquent account, customer service or customer relations, APR or interest rate, late fee and transaction issue, etc.
Here is how a customer reviews the bank’s credit card services.
Since 2011, Bank of America received a total of 53044 complaints, which is the largest among all financial institutions registered with CFPB. A year-by-year analysis reveals that the maximum number complaints it received was during 2012-2013, the period when it began to layoff and sought to cut the cost of operation. The number of complaints, however, began to reduce gradually afterwards.
Despite the fact that Bank of America is no longer the company with the largest number of complaints, it still ranks the worst among its peers in retail customer satisfaction, chiefly where it has the most number of branches, for example in California and Florida. The study is based on an annual survey by J.D. Power. According to recent FDIC data, BofA has 930 offices in California and 581 offices in Florida.
Here is a branch banking customer in California, complaining on yelp.com about the poor customer service of the bank.
According to the study conducted by American Customer Satisfaction Index, Bank of America has the least satisfied customers in 2014 and its position on the customer satisfaction index as the last among the big banks remains unchanged in the last six years. Most importantly, B of A is the only large bank that hasn’t reached its prerecession level of customer satisfaction.
On the positive side, Better Business Bureau has provided a rating of 3.77 out of 5 stars based on the customer reviews it received on Bank of America in 2015.