Brian Moynihan took on one of the toughest jobs in the world in 2010: turning around the largest bank in America following a devastating financial crisis.
Since then, the Bank of America CEO, who’s known to be risk-averse, has rebuilt the company on a solid foundation that he says will help it withstand a possible recession in 2023.
“You have to watch the risk and keep the company balanced, yet you still have to grow,” he told The Dallas Morning News during a visit with the bank’s Dallas staff this week. “We try to outgrow the economy and the industry but on a balanced basis.”
Moynihan, 63, joined the Charlotte, N.C.-based bank in 2004 after it merged with FleetBoston Financial, where he started as deputy general counsel in 1993. He has grown Bank of America to a team of more than 200,000 worldwide that manages assets of over $3 trillion.
In the company’s latest financial report from October, it reported revenue of about $25 billion for the previous three months, beating expectations.
The bank has built a strong presence in North Texas, where it has 13,600 employees and 132 financial centers. It has also provided $656 million in loans to small businesses in the area.
“If the population is growing, and the economy is growing, believe me, banks will come here to compete,” Moynihan said about the Dallas-Fort Worth market. “So we have a great position in this market. We’ve been here a long, long time.”
One of Moynihan’s biggest accomplishments during his tenure has been building up the technology side of the company. In the last decade, he’s overseen spending of about $35 billion on tech initiatives. Last year, the bank’s tech budget was about $3.4 billion, and next year that will grow to about $3.7 billion, he said.
In the beginning, hundreds of millions of the tech budget were spent to redo systems, he said. Now the budget is mostly spent on new initiatives, like its virtual voice assistant, Erica. One of its local tech executives, Manu Kurian, was awarded the most number of patents among all inventors in Dallas-Fort Worth last year with 74 patents.
“We’re a big technology company,” Moynihan said. “We have about 35,000 programmers. So you’re competing for employees going to any company, not just banking companies.”
In a wide-ranging interview with The News, Moynihan discussed his take on everything from the economy to the future of banking. His answers have been edited for brevity and clarity.
Q: Where do you fall on the nation’s economic outlook for next year?
A: Our research team, which is one of the best in the world, has the fourth quarter slightly positive and a recession in early 2023 to mid-2023. By the end of next year, it starts to come out. Our experts have one of the highest expectations of unemployment levels across the country — 5%. We were around 5% in 2017 and 2018, and we all felt pretty good.
Right now, the Dallas economy is not recessionary at all. And across the U.S., unemployment is low, wages are growing fast and people are spending money. The [Federal Reserve] raised rates, but it’s not having a big impact because there is more money in bank accounts this year than pre-pandemic or last year. They’re working and wages are growing.
We don’t see recessionary behavior now, but we predict we will next year.
Q: Do you think Texas will fare better than the rest of the U.S.?
A: That could be possible. This part of the world has a combination of industries, like financial services, oil and gas, production and exporting energy, so it’s going to fare better. But nobody’s immune to the behavior of mortgage rates rising, slowing down housing price increases and things like that.
Q: What do you lose sleep over?
A: Well, I used to say when my kids were younger, “teenage drivers.” But we worry about everything. Do you worry about heading into a recession? Do you worry about the escalation of war? We worry about all that stuff. But we’ve worked for the past 13 years now to position the company for times like this and that provides a comfort level. It’s the work you’ve done for decades to prepare for this.
Q: What can the country be doing better in regard to the economy?
A: The toughest thing to do is to get inflation under control. It’s insidious. It hurts people who are the least able to withstand it. But then we have to take the medicine, which is to let the economy adjust. Consumers are starting from a very strong place, and credit levels are much better. The hardest thing to do is to have patience and wait. Let the higher interest rates slow down demand so we get the bounce back in the economy.
What happened was all this [money from government relief programs] was put in to offset the pandemic. It was more money than was needed, but nobody knew it at the time.
We’ve also got to let supply chains even out from the pandemic side. They’re better than they were, but they’re still not perfectly even. If you talk to a company, they’ve got 100 things they need and 90 of them are fine but those 10 still drive them crazy.
And we’ve got to be investing in the future, meaning more innovation, more technology and more research, as well as more negotiations and trading to provide more sources of products and services in the country.
Q: How has Bank of America prepared for a possible recession?
A: You have to manage the company very tightly to drive operational excellence. We run the company today on the same number of employees we had in 2015 and we’re a lot bigger company and do a lot more interesting things. And then you can pay for things like more advertising, more people, better branches and new facilities. We’re redoing the Plano facility right now, actually.
Q: You’re still opening up financial centers. Where do you see bank branches and ATMs in the next five to 10 years?
A: Half our sales are digital and half our sales aren’t digital, so you need both. We had 1 billion digital interactions in September. Yet we still have about 250,000 people walk into our branches on any given day who need services. We need a high-touch, high-tech approach. And if you tell me exactly what customers are going to do in 10 years, I’ll tell you exactly how many branches we’ll have. But I don’t know. We just follow the customers’ behavior.
We had 6,000 branches about 15 years ago and now we’re at just under 4,000 branches. But you’re seeing us open branches in markets we weren’t in before, as well as refurbishing and combining. We’re at about 16,000 ATMs, down from about 18,000. But in one day, between $200 million and $250 million will go out of those ATMs. Cash is still one of the dominant ways people pay.
Q: Some banks say it’s more competitive to attract tech talent than financial talent. Is that true for BoA?
A; You’re competing for employees going to any company, not just banking companies. So that’s one good thing the shakeout has brought — a little less pressure with competitiveness. From a hiring standpoint and turnover standpoint, it’s not bad to have that slowdown.
