In a departure from its usual approach of first opening branches in new markets and then supporting those with digital efforts, Bank of America (BAC - Free Report) is now taking the other way round. In an interview with the San Francisco Business Times, Michelle Moore, head of digital banking said, “We’ve changed our approach to new-market expansion. Instead of opening a branch and supporting it with digital, we’re leading with digital.”
This approach was applied in Pittsburgh in July, where BofA came up with special offers and local advertising to attract prospective customers. This initiative allows customers to open checking accounts as well as apply for mortgage, credit cards and auto loans. The first physical branch in the Pennsylvania city will likely open in late September.
Moore further commented that BofA plans to apply the same strategy in other new markets including Salt Lake City in early 2019, Columbus and Cincinnati in mid-2019 and later on in Cleveland.
Notably, in the second-quarter 2018 earnings presentation, BofA reported an increase in deposits made through mobiles compared with those made at branches. The customers logged into the bank’s mobile app 1.4 billion times in the second quarter. Further, its active mobile users jumped11% to 25.3 million over the past year.
In the era of mobile and digital banking, the number and size of bank branches continue to decline. In sync with this, BofA is undertaking measures to technologically upgrade its financial centers and ATMs that feature video conferencing facility, allowing customers to communicate with off-site bankers.
These branches are smaller in size and utilize advance technology, with a goal to sell mortgages, auto loans and credit cards. These efforts, along with the launch of Zelle and Erica, will enable BofA to focus more on improving its digital offerings.
Other major banks including JPMorgan (JPM - Free Report) , HSBC Holdings (HSBC - Free Report) and Wells Fargo (WFC - Free Report) are taking similar measures to digitize banking operations and lower operating costs.
Shares of BofA have rallied 7.1% so far this year, outperforming the industry’s rise of 3.3%.
Currently, BofA carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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