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One of the things Bank of America (NYSE: BAC) points out whenever it gets the opportunity to do so is that a growing share of its customers are using its mobile banking app to do things they once did at one of its branches.
According to Bank of America's latest data, it has 34 million active digital accounts -- online plus mobile -- with more than 21 million of those being active mobile users. Given that the North Carolina-based bank serves approximately 47 million consumer and small business customers, this means that 45% of them actively use its mobile app.
This is a big deal because it's significantly cheaper for a bank to service customers by way of a mobile app than it is to service them in a branch or even through an ATM. Bank of America estimates that an automated deposit costs 90% less than an assisted deposit.
Figures from JPMorgan Chaseback this up. The nation's biggest bank by assets says it costs $0.65 to handle a deposit transaction in a branch, $0.08 per transaction conducted on an ATM, and just $0.03 per mobile deposit.
The fact that Bank of America's customers are so readily adopting its mobile banking app has thus allowed the bank to meaningfully cut its expense base. The average cost per $100 in deposits has dropped by 34% since 2010, the bank noted earlier this year, going from $2.61 to $1.71 as of the first quarter of 2016.
The main way this helps Bank of America is by allowing it to close branches. Over the past seven years, since CEO Brian Moynihan took the reins, Bank of America's branch count as declined by 20%, going from just under 6,000 branches at the beginning of 2010 down to approximately 4,600 today.
Data source: Bank of America. Chart by author.
Not coincidentally, this has also enabled Bank of America to reduce the number of people it employs. At the beginning of 2011, it employed the equivalent at 288,000 people. Today, that's down to only 209,000.
And both of these trends should continue, leading to further cost savings at Bank of America. In the third quarter of this year, active users of its mobile app grew by 15.8%. That's less than the nearly 20% growth rates from a few years ago, but it's still impressive given that nearly half of its customers already use the app.
With all of this in mind, and given the fact that 68% of deposit transactions at Bank of America are now done either on a mobile app or ATM, it makes sense why the bank's executives are so confident that they can continue cutting expenses.
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