One area where Bank of America (BAC 1.53%) has emerged as a leader is in the mobile banking space. As of the first quarter of this year, 22.2 million customers of the nation's second largest bank by assets were active users of its mobile banking app.
This is an impressive number when you consider that mobile banking is still relatively new. In 2013, only 12.6 million people actively used Bank of America's mobile app. That has since grown by 76%.
Data source: Bank of America. Chart by author.
To be fair, Bank of America doesn't have the top banking app when it comes to the number of users. That distinction goes to JPMorgan Chase (JPM 0.65%), which also happens to be the nation's biggest bank by assets. At the end of the first quarter, JPMorgan Chase had 27.3 million active users of its app.
Rounding out the top three consumer banks, Wells Fargo (WFC 2.73%) came in at 20.3 million active mobile users.
|
Bank |
Mobile Banking Active Users |
Digital Banking Active Users (Online and Mobile) |
|---|---|---|
|
JPMorgan Chase |
27.3 million |
45.5 million |
|
Bank of America |
22.2 million |
34.5 million |
|
Wells Fargo |
20.3 million |
28.1 million |
Data source: First-quarter earnings releases.
The upward trend in Bank of America's digital customers is important for two reasons. First, new generations of bank customers expect a slick and efficient way to bank on their smartphones. Mobile banking apps are thus necessary to attract and retain these customers.
Additionally, serving customers through digital banking channels -- both online and through a mobile app -- is more efficient for banks, costing them a tenth as much as teller-assisted transactions. This is why Bank of America's progress on the mobile banking front is so important.
Mobile devices accounted for one out of every five deposit transactions at Bank of America in the first quarter, said Chairman and CEO Brian Moynihan. That represents the volume of nearly 1,000 financial centers. Digital devices are now responsible for 22% of Bank of America's total sales.
Bank of America Chairman and CEO Brian Moynihan. Image source: Bank of America.
This helps explain why Bank of America has been able to trim its branch count so significantly over the past decade, shuttering approximately 1,500 locations since the beginning of 2009 alone. It also sheds light on why the North Carolina-based bank expects to soon meet its profitability and efficiency targets, which, at least in the case of profitability, could happen by the end of this year.
Suffice it to say, this is an area current and prospective investors in Bank of America will want to continue watching closely.
