July 7, 2015
Bank of America is looking forward to shrinking its physical footprint in an effort to provide digital options to customers. There are several reasons behind it. Here are some of them:
1. The rapid increase of smartphones and tablets, the ease of using apps and social platforms, and the exponential growth of mobile Internet have all contributed to the mobile device being the most preferred payments channel for customers. According to the British Bankers’ Association, footfall in branches is falling at roughly 10% a year while the number of transactions carried out on mobile applications doubled in 2013.
2. While bank branches help in attracting customers and cross-selling to existing ones, they add to the bank’s financial costs. Therefore, it makes sense for a bank to work with a minimal number of branches to reduce costs and have profitable returns. In Diebold's investor presentation, it estimated a $4.25 per transaction expense at a bank branch versus only 8 cents through mobile banking.
By the end of 2014, JPMorgan had 18.4 million active mobile users. This number has grown 23.5% since 2013. Bank of America had 16.1 million active mobile users and the number has grown by 15% over last year. 11% of deposit transactions by customers were done through mobile channels in Q4 2014. Wells Fargo had 13.7 million active mobile users by the end of 2014 and the number has grown by 19.1% in the last one year.
With the perspective of reducing its overhead cost and eventually attracting customers who are tech-savvy, Bank of America has trimmed 11% of its branches, totaling 4,855 branches. To keep a control on the company’s workforce, the bank has reduced its full-time workforce by 17%, totaling 68,537 employees.
The Charlotte, NC-based Bank of America has plans to accelerate its presence in some specific regions. Dean Athanasia, President of Preferred and Small-Business Banking and Co-head of Consumer Banking at Bank of America, said in an article that the company wants to double the number of digital transactions per day—including deposits made via mobile devices, which already total $3 billion.
"The more and more clients do that, the more efficient we can get," he said at Deutsche Bank's (DB) 2015 Global Financial Services Investor Conference which was held in New York on Wednesday afternoon.