Bank of America Corp (NYSE:BAC) is ready to phase out $6 billion in revenue by eliminating risky banking products and some product-associated fees. The bank is likely to focus on its existing customers to increase revenue.
Earlier, Bank of America Corp (NYSE:BAC) used to make up to $3 billion in product-associated fees including debit-card purchases charge and overdraft charges. Similarly, the bank made up to $3 billion in revenues with add-on products such as payment protection and security against identity theft. Bank of America Corp (NYSE:BAC) discontinued marketing its add-on products in 2012 considering the high legal costs associated with them. The bank had to pay $800 million in settlements against deceptive marketing techniques used for add-on products.
One of the plus points of eliminating these charges is a reliable and stable income for the bank. Bank of America Corp (NYSE:BAC) reported revenue of $14.8 billion from consumer and small business banking which is similar to what it generated in 2013 and 2012. The bank has been able to lower its costs by $4 billion by simply eliminating its efforts to add new customers and shrink its involvement in associated businesses, said Dean Athanasia, Head of Retail business for consumers in $50,000 to $250,000 asset range.
Thong Nguyen, head of Bank of America’s mass-market retail bank, said,
“We have refocused everything into our customer base because we have more customers than anyone out there.”
He further added that the bank is likely to focus on its existing customer bases instead of catering new customers.
Earlier, Bank of America Corp (NYSE:BAC) agreed to offer mortgages at discounted interest rates focused on low-income borrowers. The bank will work with NACA, Neighborhood Assistance Corp. of America, which is responsible for originating and distributing these loans.
This article has been written by Prakash Pandey.