'New' Bank of America - building on digital for retail banking growth
- Summary:
- Bank of America's claim to fame as being at the center of the biggest corporate financial settlement in history is in the past, claims CEO Brian Moynihan as he drives through digital transformation.
Little wonder then that CEO Brian Moynihan is keen to make the distinction between what he calls:
a product-focused acquisition company and in a crisis to a customer-focused company, completely focused on organic growth.
Speaking at Barclays Global Financial Services Brokers Conference last week, the subject under discussion for Moynihan is “The New BAC”, a reinvention of an American institution whose roots date back over 200 years.
A critical aspect of this is to improve the customer experience in retail banking, with a higher percentage of staff dedicated to sales and customer relationship management. Moynihan says:
In retail, the question is, in mass market banking in the United States, we have to be careful that we have a very streamlined business, we can serve the customers well and that we get the customers primary checking accounts. That doesn't mean you want to just sell, sell, sell and that's where [we] had to reverse.
He points out that regardless of the type of banking sector you’re addressing:
They're all relationship businesses, driving more relationship management officers, against more customers and more depth of customers.
Mobile moves
That means being ready to deal with those customers in different ways. Moynihan cites mobile and online banking as a case in point:
We're at 18.2 million mobile banking customers. It grows 5,000 more every single day. Our computer based customers are 30 million and actually have started growing again slightly.
So there’s a footprint from which to grow, but the challenge, according to Moynihan, is simple:
The key is where does this transition go in the technology and capabilities of company?
The answer to that is upwards, he says:
On the sales side, our digital sales, mobile and computers are now about 70% of our total sales, up from 13% last year. Our mobile sales are 20% of those digital sales, up from 8% last year and the rate is increasing. In August, the year-over-year growth rate was 40% versus the year-over-year growth rate for the first eight months of the year was 30%.
It’s also about adapting technology to meet specific needs, such as making appointments:
If you look at our mobile devices, they're scheduling appointments. Last year's second quarter that was 2,000 times a week. Last month in August, we hit 14,000 a week of scheduled appointments, averaging well over 10,000 for the year.
These are important changes, because it allows us to manage the branches a lot more effectively. So all that investment, and all that changes have resulted in some great aspects for the company.
These include, he says:
Lower cost, increased customer satisfaction, more unit sales, reduced headcount by 20 percent, moved to major transition to mobile activity and all that is now to be going to next-generation worlds. How do you book appointments and how do you have a deeper relationship around those devices, as both sales and service capabilities?
One interesting observation Moynihan makes is that, contrary to some perceptions, this is not all about chasing the millennial bankers at the cost of alienating older customers who are not digital natives. On the contrary, Moynihan tells an anecdote to make his point:
At my parent's 65th wedding anniversary, last couple of weeks ago, an 80-plus year old friend of theirs came up and said, ‘I just signed up for your mobile banking product. They taught me how to use it, I love it’.
And they’re not alone, he concludes:
Recently, we had a 100 year old person who opened up a mobile banking account, which is optimism.
My take
When I lived in the US, my relationship with Bank of America sucked. Our rather, its attitude towards me sucked. As a non-US customer, I was treated with utter indifference, forbidden even to enter the branch as a result of the terms and conditions of the only bank account they would allow me to run.
That was 20 years ago, so I’d hope that there would have been a change of approach naturally. Whether there was or not, the allegations made at both state and federal levels that led to the $16.65 billion settlement with the DoJ must surely have finally been the sit-up-and-pay-attention call to action that BAC needed.
We’ve written a lot about digital transformation in the banking sector, both in Europe and the US. Keeping an eye on the progress of ‘New BAC’ will be a worthwhile exercise.