B of A Digital Team Has a Fat Budget and a Whole Bunch of Plans

Money talks, and Bank of America's plans to triple spending on its mobile app in 2016 say a lot about its priorities.

The bank wouldn't disclose the exact dollar amount, so it cannot be ranked against its peers' spending, but the beefed-up budget is a sign of the times.

Customer expectations are changing rapidly, and banks are now being judged harshly by how their offerings stack up. Even the front-runners have to invest heavily to defend their positions. 

"We are serious about being a leader in this space," Michelle Moore, who leads digital banking for B of A, said in an interview Thursday. "We want to be a dominant presence, and so rather than double-down we decided to triple-down."

Bank of America's commitment to its digital banking platforms holds tremendous promise for the next generation of those channels, said Daniel Van Dyke, an analyst at Javelin Strategy & Research, which produces a mobile banking scorecard each year. It surveys the opinions of customers about mobile products at the top 30 banks by deposits; the 2015 results will be published later this year.

 "In 2013 we had Bank of America as the leading bank [on the scorecard], and in 2014 they were in second place, so I see this as pretty exciting," Van Dyke said. "Consumer use of bank branches was surpassed by mobile in 2015. In response, we're seeing banks redirecting funding from low-growth channels to mobile."

First in its lineup of new products is an on/off switch for debit cards, which it rolled out on Thursday. The security feature, which several small banks already offer through software from Diebold or Malauzai, is intended to allow customers to temporarily suspend their cards if they left them behind at, say, a restaurant or if they detect fraud. Previously, the bank had no such offering — a call to report a missing card resulted in a reissuance.

That feature hits on two major themes in banking right now, said Ken Hans, a partner and executive director of Blackstone Technology Group, a boutique IT consultancy. Security is top of mind for consumers, particularly around mobile banking. Additionally, a potential breach of a debit account brings a lot of anxiety — consumers have to weigh reporting the loss of a card that a thief could steal against the pain of having to reset the billing information for various automatic deductions after being assigned a new card.

"There is a push to deputize the customer in the fight against crime, and this does just that," Hans said. "But also reporting a maybe-lost card is unsettling — if I cancel it that means having to reenter things like Pandora, Amazon Prime and Netflix, versus just temporarily shutting it off. I just think it is a great customer feature."

B of A's Moore said the company is starting with the switch for debit cards because customers feel more anxiety over what tends to be their "operating account." It plans to expand the switch to credit cards over time. (Discover Financial Services has drawn considerable attention to its "Freeze-It" product through a major advertising campaign.)

Additionally, the company plans to expand its two-way text capability for alerts on things like suspicious activity associated with credit cards. Essentially, the bank sends a text to its customers when it detects something is wrong and the user can reply to validate a transaction or confirm that it should be blocked. It will expand the service to debit cards later this year, too.

In February the company will introduce cardless ATMs to its associates with a wider rollout scheduled for the summer. JPMorgan Chase also recently announced it would introduce similar technology, and BMO Harris Bank, as well as several community banks, adopted cardless ATMs last year.

Also, later this year the company will begin laying the foundation for a more seamless experience across the Bank of America, Merrill Lynch and Merrill Edge apps. Consumers likely do not see B of A and Merrill as separate units, so the company needs to do a better job of allowing customers to toggle between their apps.

In fact, many of its digital plans for the year involve creating a uniform experience across all the platforms, Moore said. Moving money between accounts, for instance, should look the same regardless if it is done online, on a phone or at an ATM.

"It should feel the same," Moore said.

While the new features are intended to push the bank fully into the digital realm, B of A understands that customers still have their reservations about mobile banking for assorted reasons. To that end, the company launched last summer a digital ambassador initiative. So far, 3,800 of its consumer-facing employees have undergone eight hours of training on the ins and outs of the platform so they can spread that knowledge to those consumers who need help understanding.

Aren't apps supposed to be intuitive and easy to use?

"Yes, but there are still times you need some help," Moore said. "Apple products are the easiest to use, yet they still have the Genius Bar."

Banks like UMB Financial have also tried similar strategies, but turning the branch into a training ground for the digital world is a good way to reallocate resources as branch traffic dwindles, observers said.

"At this point the human touch-point is so limited and precious and that is a great opportunity to grow the relationship by helping them," Hans said. He added that it is also a good opportunity to upsell.
Moore said the digital ambassador program is intended to reach those who are not utilizing mobile or perhaps underutilizing it. 

"We have 19 million mobile users, but that's really only a third of our customers," Moore said. "This is an awareness opportunity."