The biggest U.S. retail bank by deposits Bank of America Corp. (BAC) will soon be getting a little smaller.
On Tuesday, BofA said it was likely to slash up to 8,400 jobs. The Charlotte-based banking giant has seen fewer and fewer consumers in their physical branches, contributing to the closure of nearly 1,200 of the bank’s offices since the end of 2010, according to data from the Federal Deposit Insurance Corporation. Consumer banks have been adopting digital strategies—making face-to-face contact with a teller less relevant.
The announcement of the eventual job cuts, which was first reported by the Financial Times, to investors and analysts at Morgan Stanley’s Financials Conference. In a presentation, Thong Nguyen, BofA’s president of retail banking, said headcount for BofA’s retail banking business had fallen from over 108,000 in 2009 to about 68,400. Nguyen added that the headcount in the division was likely to continue to fall to the “low 60,000s,” which means thousands of more BofA retail employees will soon find themselves out of work.
The FT reported that many of the cuts could come from back office employees who are leaving and not being replaced, citing people with knowledge of the matter. But certainly some branch employees are likely to go as well. The cuts reflect in part the way technology and fintech start-ups are changing the banking business. Touch screens are replacing tellers while mobile banking is weakening foot traffic to branches. Mobile payment platforms such as Venmo and Square Cash (SQ) are taking prominence among millennials.
BofA is reinvesting the money saved from cutting jobs and branches in expert salespeople, such as mortgage loan officers and small business bankers, and renovating bank branches to create a more “office-like” atmosphere. The new bank branch will have tellers at the back of the building rather than at the front.
“So [a branch] will no longer be a building with ten people, where you have kind of automated transactions. You used to come to a branch to make a deposit, a withdrawal, or payments,” Nguyen said. “Now you’e going to use the branch to go in and open a credit card, an auto loan, a mortgage, investments, or have customer service because you have a death in the family or you just moved, or—you know, a job.”
The universal bank however has not done well this year. CEO Brian Moynihan has called for investors to brace for more expense cuts as trading revenue and exposure to energy loans pressed on first quarter earnings. Since 2010, the bank has cut more than 70,000 jobs, according to financial filings.