Bank of America boss Ken Lewis, the man who helped build Bank of America (BoA) into the largest consumer bank in the U.S. through a series of shootouts.
“We never had a lot of conflict inside the bank, because we always focused our aggression outward,” says Hugh McColl, the architect of BoA’s expansion. “To do that, I always kept an enemies list. Ken keeps the enemies list alive.”
On top of their list these days is Citigroup, or expand as big as Citigroup, if not bigger. Lewis aims at achieving Citigroup’s dominance in investment banking, and the ultimate goal is to become known as the world’s leading bank. For Lewis, who has built a first in banking–the first coast-to-coast-franchise, this is not an impossible dream. He has done it for BoA.
BoA has 5,880 branches—half as many as McDonald’s and almost seven times as many as Citigroup. The beauty of the franchise is that it is strongest in America’s fastest-growing markets, specifically California, Florida, and the rest of the south east. Those areas are also rich in banking’s most dynamic demographic: Hispanics. BoA holds $635bn (?349bn, E521bn) in deposits, one-fifth more than the number two, J P Morgan Chase; in its footprint, it has one-seventh of the total.
?In consumer banking Bank of America is the franchise to beat,? says Charles Rauch, an analyst with S&P.
BoA derives 95% of its revenues from the US and does two-thirds of its business with consumers and small companies. It harvests revenues through millions of tiny transactions each day, from garnering fees on credit cards and mortgages to making car and home equity loans. The recent deal to purchase credit card giant MBNA for $35bn sets BoA further apart. When the deal closes, it will be the country?s biggest credit card provider. The new mission: Grow fast anyway.
Lewis wants to build the most efficient bank in the US. And to do that he is turning into Six Sigma. He has already commissioned 100 Six Sigma?trained General Electric people. In BoA?s case, Six Sigma will be able to improve processes from collecting bad loans to writing mortgages. The payoff is more production and fewer errors?all tracked by sophisticated statistical measures.
Lewis deployed Six Sigma to derive a metric that BoA had never before considered: the number of products each banker sells each day. He found that 20% of the employees in a branch were selling 80% of the mortgages, loans and credit cards, and that many employees sold almost nothing. Now he imposes minimum daily sales quotas?typically, around a half-dozen products a day?for every banker. There?s a carrot to match the stick: New incentives mean star producers can earn half their base pay in bonuses.
Tags
banking
franchising
