BofA Digital Biz Hits 53% as Customers Use Zelle More Than Checks

Before too long, we might be calling Bank of America a digital bank.

The company’s latest earnings results, and commentary from its conference call with analysts, show that more than 50% of consumer sales — 53% to be exact — came from digital channels, at $1.7 billion, where that measure had been $921 million before the pandemic.

That’s up from 49% a year ago.

CEO Brian Moynihan said on the conference call that, as the company grew net new checking accounts by more than 220,000, “our digital sales are now twice the pre-pandemic level just three years ago. Even more impressive, Zelle and Erica volumes were up more than four times in pre-pandemic levels.”

The digital surge came as digital adoption by household came in at 71%, up from 64% pre-pandemic.

The bank is processing more outgoing Zelle transactions than check, he said. The supplementals revealed that there were 140 million, more than the 120 million checks written. Also, 76% of households enrolled in eDelivery, a record for the company, and 51% of eligible forms were signed digitally.

Erica Gains Double Digits 

Total Erica interactions were 123.7 million in the latest quarter, up from 6.3 in the first quarter of 2019, and up 19% year over year. Zelle users were 16.2 million, up from 13.5 million last year. Overall there were 42 million active users in the quarter, up from 37 million in the first quarter of 2021, and higher than the 42 million in the fourth quarter of 2021.

Supplemental materials released by the company show that excluding PPP, average loans and leases grew $5 billion across the company.

Combined credit and debit spend gained 15% to $198.5 billion; credit was up 25% and debit gained 9%.

Moynihan shed some light on how consumers’ cash cushions have been improving. Drilling down into the consumer “cohort” with $2k to $5k in balances pre-pandemic, the same customers have an average cleared balance of $12,500.

“What does that tell us? The consumers are sitting on lots of cash,” said Moynihan. The company has said that consumer creditworthiness remains strong, and the average outstanding balance in the quarter came in at $78.4 billion, up from $74.2 billion last year. The net charge-off ratio was 1.53% in the latest quarter, down markedly from the 3.47% last year.

It isn’t just the consumer who is willing to spend, management noted on the call. Small business card spend was up 28% year over year.

“This gives you an idea of how small businesses are reopening for business,” Moynihan said on the call.

Added CFO Alastair Borthwick, “we continue to feel good about the asset quality results of our consumer and commercial businesses near term, given our customers’ high liquidity, low unemployment and rising wages.”