We referenced some of BoA’s digital work briefly in the earlier article, but Moynihan’s more detailed drill-down serves to emphasize just how important digital enablement is to the evolving operating model in the banking industry.
It’s a big deal, is the top line message, as he cites some impressive stats - more than 25 million active mobile users and a further 10 million using other digital channels. Over the past three months, customers logged into the BoA mobile app around 1.4 billion times, for a variety of reasons, says Moynihan:
While they do transactions, they also use them for communication. They’re using their digital services to set appointments in our financial services for their convenience, rather than just drop in. This assures we have the right team-mates to serve the customers well.
Customers are doing more of their regular deposit transactions on their digital devices. [We see] more deposit transactions by a person taking a picture of the deposit and sending over mobile phone than we did by a person handing their check to the teller. In fact, 76% of all our deposit transactions are now through ATMs and mobile deposit. This allows for more meaningful relationship management activities to take place in our centers as we invest more and add more team-mates to do that.
One trend that has emerged is that customers who are digitally-enabled are ready to adopt new products and offerings from BoA more quickly. Moynihan cites the bank’s Zelle payments facility as a case in point:
On payments, you can see the early adoption of Zelle has grown. In the recent quarter, we processed 35 million Zelle transactions or more than $10 billion in principal amount - that’s twice the pace of a year ago. We believe we account for about 25% of Zelle and this activity will continue to grow as the industry continues to drive this as our standard for P2P payments. Overall, consumer digital payments have now overtaken non-digital payments, more than $368 billion in digital payments.
On sales, 24% of sales are executed digitally and we continue to expand that through other products and services. Digital Auto was launched a year ago and now more than half our retail auto volume. Digital Mortgage, which is a true end-to-end digital experience just brought out recently, is growing fast.
More than millennials
A myth that Moynihan busts is that of the fabled millennials forcing the pace of change. It’s true up to a point, but there’s not a uniform story here:
The common theory is that this is all young kids, but there’s not enough young kids in anybody’s customer base to drive this kind of activity, so it has broadened out dramatically. When you have 75% of the checks are deposited in ATM or through the mobile device, that is 75% of all the checks written that consumers deposited with Bank of America, so it’s across the board. Whereas something like [AI bot] Erica, obviously the cohort is younger just because of their familiarity with a voice-activated, Artificial Intelligence assistant and the usage of it. By different types of things, you see different activity, but you have sales of mortgage or auto definitely also skew higher in age because the nature of people who are buying homes and cars, so it’s really across the board.
I think what [is there] is really the difference between now and five years ago or 10 years ago, where the activity conducted by grandparents on mobile phones [today] is high. I always tell the story, we had a 100-year-old person who became mobile-enabled a couple years ago, which I think is tremendous optimism, but it’s across the board and that is the difference.
None of this is to say that the branch no longer has a role. Far from it, says Moynihan, who notes that 50 million customers walk through branch doors every day:
In the branches, even though we’ve come down another 100-odd year-over-year, the numbers of people in them are going up, and that means that they’re bigger stores, bigger destinations, less about on the corner transactions. At the same time, they’re tremendously important in the community, so we continue to develop our community-based branches in markets which tend to need more face-to-face help.
A priority now is digitally-upgrading the branches themselves:
What we’re doing is re-tooling and outfitting branches and ATMs. So all the ATMs will have the ability to cash checks to the penny, which is important, to actually use that as a payment device...We went digitally-first in Pittsburgh, for example...due to the fact that we already have a nationwide brand and customers there in Merrill and U.S. Trust in the credit card, and mortgage customers from the past, so we can drive that.
It’s critical to have both the digital and physical...we’re driving people to branches for relationship management at the same time we’re doing other things with their devices, so it is absolutely a combined set of capabilities and you’re looking across all of them...half million people went to their mobile device, set up an appointment and came into the branch, another million responded to calls, and 50 million people walked in, and yet we had a 1.4 billion log in. So [when] you start thinking about it - it’s an absolutely integrated experience and a competitive advantage to have both.
A strong use case exemplar of finding the optimal digital/physical mix as part of a phased digital transformation strategy.