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BofA Said to Plan Hiring Team of Online Banking Managers

BofA Said to Plan Hiring New Team of Online Banking Managers
Bank of America Corp. signage is displayed above the entrance to a branch in New York. Photographer: Jin Lee/Bloomberg

March 29 (Bloomberg) -- Bank of America Corp., the biggest U.S. bank by deposits, is seeking to hire three executives to improve its retail online and mobile-banking services, said two people with direct knowledge of the search.

The bank retained Chicago-based recruiter Heidrick & Struggles to find a head of business development, a sales manager and an executive responsible for online and mobile strategy, said the people, who declined to be identified because the search is private. Managers with experience at rival banks have been interviewed, one of the people said.

Financial firms are pushing deeper into services including mobile banking as smartphones become more ubiquitous and consumers abandon cash in favor of electronic payments. At the same time, Bank of America is under pressure to trim costs and close branches because U.S. curbs on overdraft and debit-card fees could cut annual revenue by about $2 billion.

“Banks are obviously under tremendous stress from loss of fee income,” said Robert Hunt, senior research director for banking at Needham, Massachusetts-based advisory firm TowerGroup. “The profitability model for banks is broken, and Bank of America is trying to get to a future model that works, which includes investing in lower-cost electronic channels.”

The three new positions will report to David Owen, who is responsible for the Charlotte, North Carolina-based firm’s online and mobile accounts, as well as its fraud department. He reports to Katy Knox, head of consumer distribution, who in turn reports to Joseph Price, president of consumer banking.

Mobile Banking

Bank of America has 29 million Web accounts and 6.5 million mobile-banking users, ranking it first among U.S. lenders, Price said at a March 8 conference. Online and mobile phone services are increasingly important to the company as more people rely on the Internet and smartphones to access checking accounts.

Expenses were “not satisfactory” and must come down, Chief Executive Officer Brian T. Moynihan said during the conference. The bank will close more than 500 of its least-profitable branches over the next few years. Its shares fell 6 cents to $13.31 at 9:38 a.m. in New York Stock Exchange composite trading.

The company will “continue to invest” in online and mobile banking to better serve customers, said Anne Pace, a Bank of America spokeswoman, who declined to comment further.

The number of U.S. mobile-banking users is expected to surge more than 300 percent to 77.3 million by 2014, from 18 million last year, according to Boston-based consulting firm Celent. The rise is fueled in part by the popularity of Apple Inc.’s iPhone, Celent said.

Branching Out

“We really are starting to have a lot of customers that aren’t going to visit branches, period,” Hunt said.

American Express Co., the world’s biggest credit-card issuer by purchases, responded to the change in consumer habits this week by introducing a payment system for smartphones and computers that will compete with Visa Inc., MasterCard Inc. and PayPal Inc.

Technical problems caused service failures for some of Bank of America’s online users twice this year, earlier this month and in January. Both times were the result of “routine” system upgrades that didn’t compromise security, Tara Burke, a spokeswoman, has said. The retail-banking website of New York-based JPMorgan Chase & Co., the second-biggest U.S. lender by assets, also stalled last year.

Monthly Fees

Bank of America rolled out new consumer accounts in January to ensure that users pay monthly fees unless they use online services, keep minimum balances, make regular deposits or use products including credit cards.

“Their strategy is very much to present online channels to customers to allow them to avoid fees by lowering the bank’s cost-to-serve,” said Bart Narter, a banking analyst at Celent.

Bank of America plans to close about 10 percent of its 5,856 centers over the next few years, Price said during the March conference. New locations will be smaller, with more automated teller machines. Last month, the company began offering branch visitors in Los Angeles and the Washington, D.C., area access to videoconference rooms where Merrill Lynch associates offer investment advice.

The company’s branch system, second in number only to San Francisco-based Wells Fargo & Co., was cobbled together by Moynihan’s predecessors, Kenneth D. Lewis and Hugh McColl Jr., through three decades of acquisitions.

To contact the reporters on this story: Hugh Son in New York at; Donal Griffin in New York at

To contact the editor responsible for this story: David Scheer at

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