Bank of America
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S TE F AN TH O MKE
Bank of America (A)
The banking industry is ripe for innovation. We need to grow through value creation and excel lent service
that is appreciated by customers as opposed to price alone.
— Milton Jones, president, Georgia Banking Group
“I wonder if were being overrewarded!” exclaimed Warren Butler to Amy Brady, the executive
responsible for Bank of Americas Innovation & Development (I&D) Team in Atlanta, Georgia. As an
executive in the consumer banks quality and productivity group, Butler led innovation and process
change in Bradys group, which was responsible for testing new product and service concepts for the
banks branches. In the companys elegant 55
floor conference room on a day in May 2002, the two
prepared for a team meeting on an important strategic decision that would affect how
experimentation would be done in the I&D Market.
Seeds of change were in the air at Bank of America. Indeed, earlier in the day, Butler had escorted
an astonished visitor, a European banking executive, on a tour of some two dozen real-life
“laboratories” in Atlanta. Each was a fully operating banking branch, yet in every location new
product and service concepts were being tested continuously. Experiments included “virtual tellers,”
video monitors displaying financial and investment news, computer stations uploading images of
personal checks, and “hosting stations.” (See Exhibit 1 for a selection of experiments carried out in a
single branch.)
Currently, the I&D team had 25 bank branches in Atlanta in its experimentation portfolio. Senior
management, however, had now offered them additional branches across the country that could
expand experimentation capacity by nearly 50%. This offer appeared a vindication of the I&D
Market project, which had been launched as an experiment itself only two years earlier. This reward
posed some tough questions. Would increasing the size of its innovation laboratories aid or inhibit
the groups ability to develop new product and services? What would be the effect on the group
itself? The issue of whether it was a dedicated research and development (R&D) operation or not had
yet to be resolved. And, finally, what kinds of expectations would be placed on the group if its size
were to increase so dramatically?
Professor Stefan Thomke and Research Associate Ashok Nimgade prepared this case. HBS cases are developed solely as the basis for class
discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
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603-022 Bank of America (A)
Bank of America: A Pi oneer in Banking
Many innovative banks have gone out of business, often because they deviated from the “best practices”
followed by most.
— Rick Parsons, executive vice president, Strategic Projects
When Bank of America was formed in 1998 through a merger between California-based Bank of
America and NationsBank of North Carolina, it could be proud of a long and rich history that
spanned more than 150 years. Under its last CEO, the colorful but controversial Hugh McColl, the
company had gone on a three-decade-long acquisition binge that resulted in a truly nationwide bank.
In the fitting end to an era of hunting, McColl left his last annual meeting wearing cowboy boots and
jeans on his way to a turkey shoot in Texas. Toward the end of the 20th century, Bank of America was
the second-largest national bank with nearly 4,500 banking centers in 21 states, more than any other
financial services company and with most of them in the high-growth belts of the South and the West
Coast (see Exhibit 2 for a map of the banks regional market share). In the United States, the bank
served 27 million