Piper Jaffray Retail & Financial Services Symposium

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Piper Jaffray Retail & Financial Services Symposium

  1. 1. #1 Online Bank: Service, Sales and Security Sanjay Gupta E-Commerce & ATM Executive Bank of America June 20, 2006
  2. 2. Forward-Looking Statements This presentation contains forward-looking statements, including statements about the financial conditions, results of operations and earnings outlook of Bank of America Corporation. The forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results or earnings to differ materially from such forward-looking statements include, among others, the following: 1) projected business increases following process changes and other investments are lower than expected; 2) competitive pressure among financial services companies increases significantly; 3) general economic conditions are less favorable than expected; 4) political conditions including the threat of future terrorist activity and related actions by the United States abroad may adversely affect the company’s businesses and economic conditions as a whole; 5) changes in the interest rate environment reduce interest margins and impact funding sources; 6) changes in foreign exchange rates increases exposure; 7) changes in market rates and prices may adversely impact the value of financial products; 8) legislation or regulatory environments, requirements or changes adversely affect the businesses in which the company is engaged; 9) changes in accounting standards, rules or interpretations, 10) litigation liabilities, including costs, expenses, settlements and judgments, may adversely affect the company or its businesses; 11) mergers and acquisitions and their integration into the company; and 12) decisions to downsize, sell or close units or otherwise change the business mix of any of the company. For further information regarding Bank of America Corporation, please read the Bank of America reports filed with the SEC and available at www.sec.gov. 2
  3. 3. Industry Landscape Key Industry Trends Growth of online U.S. households Broadband penetration Online banking household growth Online bill pay growth 3
  4. 4. Leading Market Share 4Q05 Market Share No. 1 Retail deposits 13.5 % No. 1 Online Banking 34.6 % No. 1 Online Bill Pay 58.6 % No. 1 Small Business Banking 22.4 % No. 1 Credit Card 21.5 % No. 1 Debit Card* 15.5 % No. 1 Home equity 8.4 % No. 5 First mortgage 3.3 % No. 2 Merchant Services 16.0 % 4 *2004 Total Purchase volume, The Nilson Report
  5. 5. Online Banking Growth 19.6 Million Online Banking Active Users 19.6* 14.7 12.4 10.1 7.3 7.2 5.8 3.2 9.5 6.6 7.4 Bill Pay users 4.0 Q4 2003 Q4 2004 Q4 2005 Q1 2006 * 1Q06 includes MBNA 5
  6. 6. Why Online Banking Is Important Incremental Online Customer Relationship Value* 28% 27% 15% Deposit Loan Profitability Balances Balances *Three years after going online, combined access-only 6 and bill pay customers
  7. 7. Among Top 30 U.S. Properties: Unique Visitors May 2006 (000s) Amazon (No. 8) 48,300 Wal-Mart (No. 20) 25,900 Bank of America (No. 26) 23,000 Disney online (No. 30) 21,400 Orbitz.com (No. 39) 15,500 Overstock.com (No. 50) 14,000 • No. 1 among financial services companies 7 Source: comScore Media Metrix
  8. 8. Service Into Sales: Rapid Growth Sales of online products % increase 161% Growth 90% 66% 2002 2003 2004 2005 8
  9. 9. Application Completion Rate – Best in Class Number of Unique Visitors Completing Online Applications 250 Bank of America Chase/Bank One Citibank Completed Applications (000) 200 INGDirect 150 National City SunTrust 100 USBank Wachovia 50 Wamu Wells Fargo 0 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Those visitors receiving acknowledgment from the domain of successful completion of the application process (e.g., quot;Thank you for applying for a credit card...quot;). 9 comScore Networks, Q305
  10. 10. Diversifying Distribution and Lowering Costs Channel Diversification Credit Card Origination Costs 48 Avg. cost $113 $98 $78 44 40 36.5MM 24% $140 36 4.7% Direct Mail 49% 32.3MM 32 29.5MM 8.9% 65% 28 14.3% Banking Center 24 67.8% 52% $50 20 65.7% E-Commerce 16 68.4% 34% 12 Other 22% 8 11.9% 14.1% 8% $30 4 7.7% 7% 2% 9.6% 13.6% 13.4% 16% 0 10% 10% 2004 2005 2006E 2004 2005 1Q06 Product Sales Mix % by Channel (Units MM) 10
  11. 11. Diversifying: Home Equity and Mortgage Sales Home Equity Sales Mix: % Online First Mortgage Sales Mix: % Online 5.2% 9.2% 4.6% 0.6% 9.2% 1Q05 1Q06 1Q05 1Q06 11
  12. 12. Growth Opportunities: Affinity Relationships • More than 5,000 organizations endorse our products including: – 1,400 professional organizations – 900 colleges and universities – 600 sports-related organizations 12
  13. 13. Small Business Opportunities • Online invoicing • Online payments • Online payroll • Cross-sell on consumer pages • New “storefront” for lending • New “storefront” for merchant card processing 13
  14. 14. Web-based ATM Opportunities • Low-cost channel • Reduce teller lines • Targeted cross-sell • Customer channel choice • Same “look and feel” • Customer satisfaction 14
  15. 15. E-Commerce Threats “To what extent do you agree with the following statement: Concern about phishing has caused me to …” Stop using online banking or bill pay 14% Not enroll in online banking or bill pay 19% No longer open emails that say they are from 20% my financial provider Not apply online for a 26% financial product 15 Source: Forrester. Base: US online consumers who answered “agree” or “strongly agree”
  16. 16. Best-in-class: SiteKey 16
  17. 17. Recognition: SiteKey “THANK YOU for the extra level of protection via the SiteKey.” “I feel more confident knowing that I am accessing a ‘true’ Bank of America site.” 17
  18. 18. E-Alerts: Balance, Payments, Security 18
  19. 19. Recognition: Service, Sales and Security 19
  20. 20. Questions and Answers www.bankofamerica.com 20

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