Will Digital Payments Slash Costs for Banks?

The cost of doing business for banks is going to decrease as usage of digital payment methods increase, according to Brian Moynihan, Bank of America’s CEO.

Moynihan told Bloomberg Television in an interview on Thursday (Aug. 4) that the company would save money and need to employ fewer people as customers make more electronic payments.

“This is just the reality: the more electronification, the less people,” Moynihan told Bloomberg. He noted that the effects could already be seen in Bank of America’s employment figures. “It’s the way we’ve gone from 280,000 people to 211,000.”

That could mean plenty of savings for banks in the coming years, according to the latest PYMNTS.com Digital Banking Tracker. The July edition of the Tracker reports that surveys from both Bank of America and Chase indicate that consumers are planning to make more digital and mobile purchases in the years ahead.

Moynihan said in Thursday’s interview that Bank of America is already working on a plan to make sure electronic peer-to-peer payments become “as ubiquitous as cash.” The company is currently collaborating with other major financial institutions, including JPMorgan Chase and Co. and Wells Fargo and Co., on a payments network known as clearXchange.

The network would connect 100 million online banking customers, enabling them to transfer money instantly from one account to another. The banks involved are reportedly hoping that the collaboration can help combat the growing popularity of peer-to-peer payment services, such as PayPal’s Venmo, among millennials.

“It’s more secure and more safe if people are carrying less cash,” Moynihan said. “But the methodology of transfer has to be easy, and that’s what we’re developing.”