Bank of America dominates digital banking. Here’s how it plans to stay ahead.

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Bank of America dominates digital banking, no matter how you count it.

The bank now has 66 million consumer customers that interact with it 10 billion times a year. Ninety-seven percent of those interactions are digital — mobile, online or through interactive voice reponse.

That customer figure includes 19 million mobile banking logins and 5 million online banking logins a day. The bank has 30.4 million mobile banking users. Its artificial-intelligence-based virtual assistant Erica has 15 million users who use it a combined 12 million times per month.

Erica's user base alone is “bigger than many of those headline-grabbing fintechs,” said David Tyrie, Bank of America's head of digital, financial center strategy and advanced client solutions. The largest challenger bank, Chime, has 8 million users, he pointed out.

“[BofA officials] have poured a ton of money and resources into Erica, and it seems to be paying off,” said Stephen Greer, senior analyst at Celent.

In July, the bank had 11.7 million people using its version of Zelle, the person-to-person payments service managed by Early Warning and owned by a consortium of banks.

Bank of America has more retail deposits in the United States than any other bank: $980 billion. Its closest competitor, Wells Fargo, has $857.9 billion. (Neither attempt to price deposits attractively — Bank of America’s basic savings account, Advantage Savings, and Wells Fargo’s Way2Save both pay a 0.1% annual percentage rate.)

There are a few ways to look at Bank of America’s digital dominance. One could argue that it naturally follows the bank’s size. Its 4,300 branches make it accessible, and consumers traditionally have made decisions about where to bank based on whether there’s a branch nearby, Greer said. Bank of America has also acquired deposits through its mergers with other banks over the years.

“When you're the biggest, certainly inertia is a large part of that,” said Emmett Higdon, digital banking director at Javelin Strategy & Research. “I don't think you can point to digital enhancements and say they have played a huge role here.”

But the bank’s drive toward continuous improvement of its digital channels is also a factor.

Its focus on making account opening easier, for instance, has surely been helpful, Higdon said. Bank of America has good customer support around digital account opening, he said.

“Anything that can make it easier to do business with the bank is certainly going to contribute to growing your deposit base,” Higdon said. “That's what makes them such a difficult competitor — their size to begin with, but then they simply don't sit still. There's very little time for their competitors to catch their breath or to catch up when they continue to push things forward.”

“They've always been at the forefront,” Greer said. “In the arms race for digital, there's really no way a smaller institution can keep up with that, or even a vendor.”

Recent upgrades

According to Tyrie, Bank of America added 500 features in mobile and online banking between January and July of this year.

“In just April through August, we had more than 2,000 projects and new capabilities — that's combining those that are customer-facing with those that make our associates better and faster,” Tyrie said. “That’s 14 million hours’ worth of development work and 32 million lines of code. And people think we don't really innovate much.”

In January, for instance, the bank rolled out a monitor in Erica to help catch duplicate charges. In July, it integrated its mortgage servicing platform with its mobile banking app, so customers could see the exact status of their mortgage loan application.

In another recent addition, the bank is letting customers integrate Bank of America accounts with Merrill Lynch investing accounts in their mobile banking app, and trade from the app. It’s not the first to do this. Ally Bank lets customers access their investment accounts (from TradeKing, which Ally acquired in 2016) alongside their bank accounts within its app. Some fintech apps like Stash let customers work with their checking and investing accounts side by side.

Some banks, like BBVA, let customers pull in data from outside accounts to see their entire financial picture in one place.

Asked if Bank of America plans to allow customers to bring in data from non-BofA accounts, Tyrie said it does not at this time.

“Data aggregation is a big headline conversation,” Tyrie said. “When you get down to the actual users and who wants it, the numbers are much smaller. We will happily provide that to our customers if they demand it. So far, they haven't.”

Another recent addition to Bank of America’s app is the ability to see which third parties are accessing their bank account account data. For instance, if a bank customer uses Venmo’s payment app, it would appear on this list. Customers can revoke such access through the app. Wells Fargo and a few other banks also offer this.

“I think that's going to be critically important going forward as open banking takes stronger hold and you've got more reasons to share your data and push it here and there,” Higdon said. “Having a command center, you can see an app you haven’t used in two years and turn it off right from within your banking application. That instills a lot of confidence in the user.”

The bank also said it has stepped up security for Zelle. Users can now see a little information about the person they’re sending money to and a photo if one is available.

“People want to trust who they're sending the money to,” Tyrie said. “We do simple things like put a visual indicator on it. So the user can see if the person they’re paying is in the registry, and trust that it's going to go to him.”

This could help save Zelle users from themselves, since a lot of Zelle fraud comes from users sending money to con artists — people who, say, promise to send a piece of furniture or a concert ticket and never do.

The bank's new digital features are often inspired by customers’ comments.

“They very much pay attention to customer feedback, whether it's coming through voice-of-customer work that they do, whether it's coming through the app store and just paying attention to comments in the app stores,” Higdon said.

Need for engagement

Higdon pointed out that having lots of logins doesn’t mean people are engaged.

“The number of mobile logins is kind of like the number of downloads,” he said. “It doesn't tell you anything at all about the level of engagement that you're creating with your customers.”

Bank of America is right to focus on feature usage and adoption, he said.

“But I didn't see a lot of evidence apart from Erica that suggests how they're going to lift that level of engagement,” Higdon said.

Many banks, including U.S. Bank, Huntington Bank and TD Bank, are trying to build engagement through personalization tools that give customers a heads-up when there's something they should be concerned about or an opportunity.

"Customers need the bank to take personalized insights further and make them actionable,” Higdon said. “That's what we're really missing today.”

Erica could help, if it could be more proactive.

“If Erica was popping up somewhere to say, 'Hey, don't forget, you've got that quarterly Geico payment of $800 due next week and from your current cash flow, it looks like you might not be able to make that payment, unless you've got some other deposits coming,' " that might help, Higdon said. Erica might not be able to tell a customer about a Geico payment specifically, but it could tell customers when their spend path is headed towards a low or zero balance in the next week, a bank spokesperson said.

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Digital banking Mobile banking Virtual assistants Artificial intelligence Bank of America Digital Banking 2020