Code, not checks, is the future of finance: BofA's Moynihan

Bank of America's chairman and CEO Brian Moynihan emphasized the importance of investing in technology at a breakfast at the Economic Club of Washington, D.C. on Tuesday.

"We invest about $4 billion in new code each year." Moynihan said. "Every weekend we'll have a couple million lines of code we'll be able to embed in our systems and change our systems to add new technology. That's not to run the system – that's another $8-$9 billion – that's just new activity."

Moynihan said the impact of technology has been "unbelievable."

"In the mid-'90s when I was head of strategy for the company, I remember consultants coming in and saying in 20 years we'll have no bank branches," Moynihan said. "Well, it's been 30 years and guess what? We still have about 3,700. The reality is people want all the ways."

Moynihan said Bank of America was among the first financial institutions to launch an app on the iPhone, recognizing early on the need to meet customers where they are.

"Back then it was an unusual thing to have an app," Moynihan said. "Everybody went to websites, so that took off. From that start, we now have 40 million consumers who bank digitally with us all the time. Last year, about 90+% of our interactions with consumers were digital."

While consumer preferences have undoubtedly shifted toward online banking, Moynihan said the branch isn't dead. More than nine out of ten Bank of America customer interactions are online or on mobile, but Moynihan said he realizes the important role branches still play. The chairman and CEO listed a variety of reasons why someone would prefer to walk in, from college financing to mortgages and retirement planning.

"All those things are critically important, so you have to be able to do both," he said.

Other physical financial instruments like checks are also becoming antiquated, but are far from extinct, Moynihan said.

"The number of checks written from 2019 to now is probably down 30% to 40%, but there's still a fair amount," Moynihan said. "What you see is the dollar volume written stays flat but the number written comes down."

The dynamic of how payments are made has evolved to be heavier on the digital side with Zelle now a huge portion of consumer transactions, but Moynihan said Bank of America still sees customers using checks for large purchases.

"Zelle didn't exist a decade ago and now is a dominant force. Our clients send more money over Zelle than total Venmos sent. It's become the dominant way," Moynihan said. "That's replaced a lot of small-dollar checks, but the big-dollar checks still exist."

Looking toward the future of finance, Moynihan told the Economic Club of D.C. that a Bank of America stablecoin could be on the horizon if the Trump administration continues its push.

"It's pretty clear there's going to be a stablecoin, which is going to be a fully dollar-backed type of thing, which is no different than a money market fund or check access through a bank account, really," Moynihan said. "If they make that legal, we will go into that business. We will have a BAC – a Bank of America coin U.S. dollar deposit – and it'll be able to move back and forth because now it's legal for us to do it. The question of what it's going to be useful for is going to be interesting."