BANCA DIGITAL

BANK OF AMERICA’S DIGITAL PLATFORMS SEE STRONG ENGAGEMENT: Another quarter of solid digital growth shows that Bank of America’s (BofA) investments in its digital infrastructure, including integrating new offerings like Erica into its mobile banking app, are paying off. 

BofA added 1.7 million users to its digital channels, predominantly to mobile. The bank’s active digital users jumped from 34 million to 35.7 million annually in Q2 2018, an increase that was largely driven by mobile banking users, which grew 11% YoY. This mobile banking user growth outpaces some competitors — though JPMorgan Chase is adding mobile users faster, Wells Fargo falls behind at a much slower 4% YoY rate — but still marks a deceleration from the 13% YoY growth it posted in Q2 2017.

Despite decelerating growth, BofA’s mobile channel is seeing rising engagement. Mobile channel usage grew 30% YoY to reach nearly 1.4 billion app logins in the quarter, which is an acceleration from the 13% growth posted in the prior Q2. That increase was likely due to BofA’s digital innovations, which its users responded well to:

  • Erica reached over 1 million users in Q2. BofA rolled out Erica, its virtual voice assistant, in its mobile banking app last quarter. It surpassed 1 million users in June, within two months of launching, and had already doubled that total as of July 13. This rapid adoption indicates that BofA is offering relevant services that consumers want to use — Business Insider Intelligence expects voice payment adoption to more than quadruple by 2023. Erica can therefore be used to help prop up already strong engagement and contribute to a strong uptick in digital interactions.
  • Zelle transactions more than doubled. The firm integrated Zelle, the bank-based peer-to-peer (P2P) payments service, into its app in 2017. The firm is seeing growing engagement with the platform: Zelle transactions more than doubled annually, with more than 35 million P2P transactions in Q2 2018, up from 14.5 million transactions in Q2 2017.

BofA’s investments in popular digital offerings, combined with its recognition of the value of bank branching, will likely continue to drive engagement. BofA announced its plan in Q1 to open 500 new branches across the US over the next four years, which came as a surprise considering that it’s closed 1,600 branches nationally since 2009. But branches are still a valuable asset to banks because they’re largely favored by consumers — 60% of US consumers would still prefer to visit a branch to open a new checking account — which makes embracing these locations important. Rather than focusing on onboarding a high volume of new customers, firms should focus on bolstering engagement among their existing customers, which could ultimately lead to stronger customer loyalty. BofA’s model demonstrates a successful example of that strategy, as it offers popular services within its digital platforms that lead to more customer interactions.

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