Good morning.
Erica is a financial assistant that’s been having a lot of conversations over the past five years—more than a billion. But she hasn’t lost her voice.
So far this year, Bank of America’s clients have engaged with Erica more than 333 million times. Some of what the virtual assistant does is help with tasks like sending money, accessing account information, transferring money between accounts, and finding a nearby branch or ATM. But “personalized and proactive insights” now account for more than 60% of engagement with customers, according to Bank of America.
For example, clients are using Erica 2.1 million times per month to understand spending habits. CEO Brian Moynihan sang Erica's praises during the company's Q2 2023 earnings call on Tuesday, noting that interactions with Erica rose 35% in the past year, and now there have been 1.5 billion client interactions over five years.
Bank of America customers are increasingly using digital tools to get their banking done. For the quarter, digital households accounted for 83% of the bank’s relationships, which is up from 77% in the same time two years ago. CashPro App sign-ins are up nearly 60% from last year. "In consumer, we now have 46 million active users that are digitally engaged with our digital platform and are logging [in] over 1 billion times a month,” Moynihan said on the call. “And even with this scale, the stage of maturity logins is up double digits from last year."
For Q2, Bank of America’s net income rose 19% to $7.41 billion, compared to $6.25 billion at the same time last year. Revenue increased 11% to $25.2 billion. The economy “remains healthy,” but at a slowing rate of growth, Moynihan said. "The consumer is pretty resilient," Bank of America CFO Alastair Borthwick said. "And we're benefiting [from it] right now in the card experience."
‘The efficiency toolbox’
Bank of America and other major banks are betting on innovation like A.I. to help build future growth, according to John Cunnison, chief investment officer at the bank and wealth management institution Baker Boyer.
"The big banks have been automating for years now," Cunnison tells me. "A.I. is just one more tool in the efficiency toolbox."
Does he think every bank must be on board with growing digital to remain competitive and relevant?
"Yes and no," Cunnison explains. "For smaller banks, with more affluent clientele, the magic will be in digitally enhanced human interaction. A.I. and other digital tools in the hands of a thoughtful financial advisor or banker will provide a very compelling customer experience."
However, it's unlikely that digital offerings will be a major differentiator in how customers choose banks, Cunnison says.
"All the major banks will be going in this direction," he says. "And for mid-sized and small banks, there are a tremendous number of software solutions to choose from. Ultimately, these digital tools are likely to enhance the customer experience and, in the right hands, allow financial professionals to do more with less. It’s not about replacing people. The winners are going to leverage technology to allow the best people to do more."
The recent white paper "State of Digital Sales and Engagement in Banking,” commissioned by Alkami Technology, Inc. and written by Jim Marous, a financial industry strategist and influencer, addresses this topic. Over the next three to five years, financial institutions will employ A.I. to help with increasingly complex tasks, like financial planning and investment advice, the report predicts. More than 50% of the banks surveyed believe implementations will be effective or very effective beyond the five-year time frame.
Moynihan said on the call that investments made in technology have helped Bank of America “grow industry-leading positions in digital tools,” also “enabling our clients to do great things and making us more efficient.”
But consumers will continue to be the judge of that. And it’s up to Erica to have the right answers.
Sheryl Estrada
sheryl.estrada@fortune.com
