More Staff Cuts Hit Bank Of America Consumer Banking Division
Bank of America (NYSE:BAC) has announced its intentions to cut thousands of additional employees from its consumer banking workforce. Since 2009, the bank has reduced the number of employees in that division nearly 40 percent, with the employee count falling to 68,400. The recently announced cuts are expected to take that number down to the low 60’s, affecting about 8,000 workers. The company did not give a time frame for the reduction.
Bank of America chose to focus its workforce cuts on this division because consumers are increasingly using ATMs and mobile devices for deposits and check-cashing. The bank reports having about 7 million customer contacts in branches per week, but says that volume is going down about 11 percent a year. The digital banking revolution has reduced the need for back-office staff and bank tellers. A person familiar with the situation said the cuts would come largely through natural turnover.
Bank of America is the nation’s biggest retail bank by deposits and second largest by assets. The consumer banking division accounted for more than one-third of the company’s total revenue.
In the unit, total revenue for the first quarter fell 1 percent in 2015 to $30.6 billion from the previous year. Net income increased 5 percent to $6.7 billion, mainly due to lower expenses and a smaller provision for bad loans.
As the company trims its consumer banking staff, it is planning to add salespeople in a bid to increase revenue. Those new positions will include bankers and advisers for mortgage loan, personal and small business investments. Over the past few years, the number of salespeople employed by the company has risen from 5 percent of its employee base to 30 percent today.
Bank of America is planning to refurbish many of its 4,700 branches to become more sales-oriented. The company will begin with 1,500 carefully selected branches and then plans on refurbishing 200 to 300 more every year until the project is complete. Bank of America has also increased its online operations as the number of people using mobile banking grows. CEO Brian Moynihan said in a statement, “We’ve continued to invest in the areas we can grow.”
The banking industry as a whole has resorted to various cost saving measures in the face of strict regulations and a tough operating environment. Since the financial crisis in 2008, tough capital requirements have curbed banks’ ability to lend and low interest rates have weighed on the financial results. In order to combat these pressures, banks opted to cut branches, exit certain operations and reduce headcount.