Bank of America CEO Brian Moynihan said that the adoption of technology at the second-biggest U.S. lender has allowed him to cut 100,000 workers in less than a decade.
“The straightforward way to get people to feel it is this: We had 288,000 people when I took over as CEO on Jan 1st ,” Moynihan said in a Tuesday interview with Becky Quick at CNBC’s Net/Net Summit at the New York Stock Exchange.
“We had 204,000 last quarter. Step back and think about that,” Moynihan said. The reduction is “more employees than Delta has I think. All caused by the ability to apply technology to processes and capabilities, and customer behavior changed.”
Moynihan appears to be correct: Delta Air Lines has more than 80,000 employees, according to its website.
Bank of America’s headcount peaked at about 305,000 after he took over, Moynihan said. The bank hired furiously in the aftermath of the financial crisis to help resolve mortgage-related woes tied to the acquisition of Countrywide Financial.
Bank of America began plotting out its digital strategy in 2008 due to a need to reduce costs, Moynihan said. While online banking has been around since the 1990s, Apple’s introduction of the first iPhone in 2007 was a game changer, he said. It effectively allowed customers to carry a bank branch in their pockets.
Today, almost 26 million of the lender’s customers use its mobile banking app, an adoption rate that appears to be accelerating. That shift has allowed the company to close underperforming branches and shift personnel to client-facing positions.
Artificial intelligence and robotic process automation has helped the firm’s Wall Street divisions cut 84,000 work-hours a year, Bank of America said this week in an earnings presentation. The bank has also consolidated data centers and moved applications to the private cloud, helping it save money.
While cutting rank-and-file positions, Moynihan realized three years ago that they had left too many managers — about 30,000, he said. He slashed a third of those jobs in just a few years.
The trick to managing such a massive number of layoffs is to allow a company’s natural attrition rate — usually, about 10 percent — to reduce the human toll of job cuts. By taking advantage of the people who are leaving jobs voluntarily, the firm can attempt to move staff made redundant into new positions. The bank also has a solid severance package for those being terminated, he said.
Handing out pink slips is never easy. The “worst time I ever felt as a manager in 25 years or so” was in late 2007, when the bank had to abruptly cut thousands of positions, Moynihan said.
“We realized we screwed up totally and we laid off like 10,000 people instantaneously,” Moynihan said. “Plan ahead, and let attrition be your friend.”
During the wide-ranging interview, the 59-year old CEO said he wanted to run Bank of America for “as long as I can do it.” “Warren Buffett is 87, he’s having the time of his life,” he said, referring to the chairman and CEO of Berkshire Hathaway.
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