Bank of America is all in on mobile.
Mobile continued to grow in importance as a channel for the Charlotte, N.C.-based bank, with 14.4 million mobile customers, up from 14 million last quarter and 12 million a year ago.
But how much does it cost BofA to get that audience?
We dug into BofA’s earnings reports and found that CEO Brian Moynihan revealed the bank’s tech spend to grow its mobile channel during today’s 4Q 2013 earnings call. Moynihan said the bank had invested “half a billion dollars in the online mobile platform across the last three or four years, and we’ll continue to invest at that rate.”
Bank of America is the second-largest bank in the nation by assets.
Asked about where BofA is in the investment cycle for mobile banking, Moynihan replied:
We’ve got a great product, and I think sort of a steady state. We spend, just overall, about $3 billion and change in annual technology development. And we expect that number to stay constant over time.
In other words, “over the last three or four years” Bank of America has invested about $35 per mobile user in technology costs, assuming approximately $500 million of mobile IT costs.
Meanwhile, Bank of America’s mobile check deposits constituted 9% of total checks deposited by customers, up from 7% the previous quarter, Moynihan said. He also pointed out that this remote deposit capture functionality “didn’t exist until basically the third quarter of ’12” at BofA.
As to what this growth in mobile means for other channels, CFO Bruce Thompson said the branch network would continue to contract in 2014. The bank now stands at around 5,151 branches, down from 5,243 last quarter, and Thompson told investors to “think of us being 5,000, maybe a few less than that, before the end of 2014.” That would constitute a rate of contraction of around 3%.
CEO Brian Moynihan qualified that the bank was simply following where customers led as far as the banks’ branch strategy is concerned, and that the bank was still determined to “dominate the physical side and the e-commerce, online mobile side at the same time, and that’s why we’re investing heavily in both platforms.” Square footage devoted to transactions would likely decline in 2014, Moynihan said, but “square footage dedicated to sales could increase.”
It’s the money devoted to mobile, though, that must make CEOs at smaller banks, and even rival big banks, shudder.
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