Like its competitors, Bank of America Merrill Lynch is spending a colossal amount of money to stay competitive in the financial tech race: Its $10 billion annual tech budget sits just behind JPMorgan’s $10.8 billion and ahead of Citigroup’s $8 billion.
A large chunk of that spending goes to the firm’s profit-driving consumer-banking operation, which accounts for $34.5 billion in revenue and $8.2 billion in net income, which is 38% of the firm’s total.
As the head of digital banking, Michelle Moore is responsible for wisely deploying a chunk of that budget to fuel the consumer bank’s lofty tech ambitions. That partly entails building out cutting edge new features for the bank’s customers, whether that’s tricked-out ATMs that can perform cardless transactions or the AI-backed virtual banking assistant Erica rolled out in April and has been used by 3 million customers through early September.
And it also entails luring top tech talent that can help in creating and maintaining such features, and Moore has had success in recent months landing top hires away from companies like Apple and Disney.
What’s Moore’s strategy for getting recruits to ditch sexy tech and entertainment companies for Bank of America?
She told Business Insider she woos potential hires by pitching them on the scale of impact they can have on individual customers — Bank of America has 67 million of them — but also on the company’s tech savvy and growing list of innovations that she says make clear they “are not a boring, stodgy bank.”
“This is an opportunity for you every day to help make a difference in someone’s life,” Moore said.
She added that recent hires have “left massive jobs and massive companies … to come here” in part because “they could see the vision, they could see the opportunity.”
The pitch worked on Tommy Elliott.
As a senior program manager on Apple Pay since 2014, Elliott had a front-row seat working with banks across the US, Europe, and Asia. He saw enough that he never wanted to work for one.
So how did he end up joining Bank of America as head of digital payments this June?
After a gauntlet of roughly a dozen interviews, he came away impressed not only by Moore’s vision, but also by the bank’s engineering talent, the loose and customer-focused culture, and the scale of the firm.
The impact he could have wasn’t lost on him, either. While the number is growing, only 25 million customers actively use the mobile app, and only 4 million use Zelle, the peer-to-peer payments platform that launched to customers in 2017.
“The biggest thing is just the potential,” Elliott said. “When I look at the scale of the products I’m responsible for, we have so much room to grow.”
Nikki Katz joined in August from Disney, where she was a VP of technology, to run the mobile apps team as head of Digital Strategy and Emerging Experiences, and she said she was persuaded in part by the tangible results that had sprung from the firm’s massive tech budget.
Even before she’d been recruited, Katz was pleasantly surprised by the innovations and upgrades she found in the firm’s branches, including the fancy, new cardless ATMs as well as video monitors that let you speak remotely to financial experts.
“Here was a bank that was clearly investing significant capital in experimenting,” Katz told Business Insider. “This is actually proof in the pudding.”
To be sure, others big banks are also spending billions on tech and it remains unclear how BoA’s strategy will pay off in the long-run as it competes head-to-head with rivals to attract and retain customers.
A chatbot like Erica isn’t just cool toy to show off — “We don’t go run around chasing shiny objects,” Moore told BI — it’s goal is to make customer’s lives simpler, as well as to automate processes and trim costs, like encouraging paperless e-statements or answering questions before a customer has to dial up a call center.
As Bank of America CEO Brian Moynihan explained while highlighting the company’s digital bank investments in a second-quarter earnings call: “By investing in client capabilities, we make our clients’ lives easier, more efficient for them, more effective for them, and their satisfaction goes up. Our costs then, in turn, go down and because our process become more automated.”
A product that increases customer satisfaction while stripping out costs makes a gaudy $10 billion tech budget justifiable.
Getting the best talent to imagine, construct, and execute such features will be key to Bank of America getting the best bang for its buck.