Brian Moynihan | Reflecting on a Decade as a Financial Health Visionary

Jennifer Tescher:
Welcome to EMERGE Everywhere. I’m Jennifer Tescher, founder and CEO of the Financial Health Network. For two decades, I’ve worked with leaders across industries to answer one central question, how can we make people’s financial lives better? Now I’m sharing these conversations with you. Listen in to hear how these visionaries are rewiring our society to support financial health for all.

2024 marks the 20th anniversary of the Financial Health Network and of the financial health movement as a whole. Over these last few months, we’ve reflected on our last two decades, the successes, the headwinds and tailwinds that lie ahead and the work that remains to be done. In June, we brought our network together at our annual conference EMERGE. And for me, one of the highlights was honoring the next recipient of the Financial Health Visionary Award.

We created this award in 2018 to recognize leaders who are really doing financial health, who are building a more accessible and inclusive financial system, and empowering the next generation of leaders to improve financial health for all. This year’s recipient was Bank of America chair and CEO Brian Moynihan. I had the opportunity to sit down with Brian at EMERGE and talk to him about his vision and why he is so supportive of financial health as a business strategy.

And I thought it was a fitting way to bring this season of EMERGE Everywhere to a close by letting you listen in to our conversation. And so, without further ado, take a listen to my conversation with Brian Moynihan, prerecorded at EMERGE.

Brenton Peck:
This is my 8th EMERGE and recently our team asked me what my most memorable moment of the conference has been. And without a doubt, it was in 2018 when we awarded Dan Schulman, CEO of PayPal at the time, with our inaugural Financial Health Visionary Award. Today may surpass that. Here to introduce our Visionary Award session is Jennifer Tescher.

Jennifer Tescher:
Hello again, everybody. Good afternoon. The Financial Health Visionary Award recognizes individuals who have shown unparalleled leadership in building a more accessible and inclusive financial system and empowering the next generation of leaders to build innovative solutions that improve financial health for all. As you just heard from Brenton, we created the award in 2018 to recognize then PayPal CEO Dan Schulman’s pioneering commitment to financial health. He was kind of our financial health poster child for a while. In 2021, we presented the award to Queen Maxima of the Netherlands, the United Nations Secretary General’s Special Advocate for Financial Inclusion for her work in advancing the mission and vision of financial health on a global scale. This year I’m honored to present the award to Brian Moynihan, the Chair and CEO of Bank of America. 

Jennifer Tescher:
So my relationship with Bank of America began in 2007 when I was invited to join its National Consumer Advisory Council. And so I had a front row seat to the tumult of the financial crisis and its impact on both consumers and also the bank. Bank of America’s stock dipped as low as $2.7 a share in 2019. And in 2010, which was Brian’s first year as CEO, single family mortgage delinquencies across all banks peaked at nearly 11.5%.

Contrast that with today, Bank of America stock trades around $40 a share, net charge-offs are down 50% and customer satisfaction has improved by double digits. While these results are impressive, what’s more impressive and why Brian is up here today is how they were achieved. As Brian considered how to turn things around in the wake of the crisis and the Great Recession, he was guided by the belief that the bank’s long-term success required leaders to consider how the firm’s decisions would impact the financial lives of its customers. And so under his leadership, the bank committed to a new purpose: help make financial lives better through the power of every connection.

Now, every bank, every company has a purpose statement, and for some it’s just a fancy poster on the wall. But this really became the North star for a larger enterprise shift. And by 2014, the bank had adopted the phrase responsible growth to describe its strategy, which included four principles. Grow and win in the market, no excuses, grow with a customer focused strategy, grow within Bank of America’s risk framework, and grow in a sustainable manner. 10 years later, I am told that Brian still starts every internal meeting, repeating that mantra.

From there, the bank created a fully integrated customer feedback program and a customer care team flipping its definition of performance to focus on customer-centric measures like satisfaction and attrition rates rather than focusing primarily on the performance of individual products. The bank also streamlined its consumer business by offering a core set of transparent and affordable products and services, including a no overdraft solution safe balance, which we were really pleased to help the bank develop, and which today represents more than half of all the new accounts opened. They also created more recently Life Plan, a digital tool that allows customers to set and track both short and long-term goals.

One third of the bank’s branches are in low and moderate income neighborhoods, and bank leaders also invested in those branches, driving organic growth and dramatically increasing the satisfaction of both customers and employees in those branches. Speaking of employees, the bank has made a significant commitment to the financial health of its 200,000 plus workers. The bank is on record that it’s increasing the minimum hourly wage to $25 by 2025. It now offers most of its employees stock grants. Those earning lower wages pay less for health insurance. And these are just a few of many leading practices.

We recently published a case study detailing the bank’s decade-long financial health journey driven by Brian’s fundamental belief in the importance of centering the needs of customers and workers alongside investors. And you can check it out for yourself. It’s available on the EMERGE app.

Unlike some corporate CEOs, Brian isn’t flashy, he doesn’t seek the limelight. He simply lives his values and does what he thinks is right every single day. I first witnessed this quality within his first three months in the top job. Regulators had set new rules requiring banks to get permission from customers to provide overdraft services on debit card purchases, and many banks had launched campaigns to convince their customers to opt in.

Brian, however, decided that the bank would stop enabling and charging for debit overdrafts altogether. No other major banks followed his lead, and at the time, debit purchases accounted for about 60% of all of the bank’s overdrafts. Brian was unwavering and the bank has continued to lead the industry on reining in overdraft practices. Just 2 years ago, it reduced its overdraft fee from $35 down to 10, and over the last 15 years, overdraft revenue at the firm is down 90%. You won’t hear Brian say the words “financial health” very often, but time and time again, we have seen him do financial health, embracing it as an approach to achieving responsible growth that drives bottom-line benefit. I can’t think of anyone more deserving of the Financial Health Visionary Award, so help me congratulate him once again.

Brian Moynihan:
Thank you. Thank you.

Jennifer Tescher:
Thank you for being here.

Brian Moynihan:
It’s my pleasure. Thank you for honoring me and importantly, the 200,000 plus people who do all the work in the company and I just get to take credit for it at nice events like this.

Jennifer Tescher:
It is a great team. It’s a great team.

Brian Moynihan:
They’re tremendous. It’s a tremendous team.

Jennifer Tescher:
So I want to take you back to 2010. The nation was emerging from the financial crisis and from the Great Recession and you became the chair. What was going through your mind as you were devising this new purpose and ultimately the responsible growth approach?

Brian Moynihan:
Well, I think you have to go just back to the decade before only to think that if you went from 2000 to 2010, what happened in the Bank of America is it became coast-to-coast, national consumer brand, had gone through obviously a financial crisis, had bought MB&A in the credit card business and become a major player there, that had bought countrywide in the mortgage business. It had about, I think it started the decade probably with 100,000 people, ended the decade with 300,000 people, to give you a sense. So it just had grown. And so when we came in, what I was faced with was something different than the manager team was faced with that anybody in the history of any of the companies that come together is we were done by, we couldn’t buy, and we just had to focus on organically driving the company.

And that then said, as the biggest consumer brand, going through a bit of a mess with mortgage issues and things like that, we had to sit there and say, we have to run this company in a way that our brand could withstand anything and go forward. And we actually started on some of the stuff in 2007 and ’08 and it carried through and the team has carried it through Holly and Aaron and Dean and Tong and all the people over time. But basically we said, “Look, we’re going to provide a fair set of products and we’re going to do it in a way that the numbers of accounts we sell come way down, but the retention rate of those customers come way up,” that were the primary customer account, therefore you have the economics to make the changes that give up 90% of the overdrafts and things like that. And it’s all worked. I mean, the digitization was important because everybody has a phone now. If you go back 2010, it wasn’t as prevalent.

Jennifer Tescher:
The iPhone just had come out in 2007.

Brian Moynihan:
In ’07, and we were the first app available on it. So we knew it was working, it was already off, but you didn’t have the broad earning population, the broad working population, the broad population having it. So all that enabled activities that allowed us to bring down the cost structure. And so we have [inaudible 00:11:11] the balance. You have to have profits and purpose. That’s what responsive growth actually articulates. You have to be customer-centric, [inaudible 00:11:16] the customer in. But part of it came, but that was a strategy that we knew would end up with a brand that was, as you said, at a record high now, the customer satisfaction record high now, the turnover rate among customers and teammates, lowest it’s ever been. Those are important things that generate the economics to pay for all the changes we made in fee structures and account structures and no fee accounts and $500 minimum low balance, the small loans, all the things we did were basically funded by that ability to settle the place down, but against that basic principle.

Jennifer Tescher:
So what you just described is a long game.

Brian Moynihan:
Yeah.

Jennifer Tescher:
Wall Street doesn’t make it easy to play the long game and particularly where things were in 2010, I mean, maybe that gave you more room because you couldn’t go much lower. But how do you think about that? How do you do the long term while keeping Wall Street happy?

Brian Moynihan:
How do you play the long game? The answer is you have to play the long game. And faced with what we had, we had to play it even more than most because we couldn’t make acquisition. There was no ability to repeat the past. And so we had to play the long game. And the long game is easier to play. Now we had a mess. And so people weren’t expecting a lot out of us frankly. And so that gave us some air cover, but that was a lot of work. I mean, to go through what we had to go through in the mortgage business, you think of all the modifications we took, we ran customer fairs all over the country along with various groups to try to do it. But it gave us a little bit of cover. But remember that, and you and your colleagues that we talk at NCAC, which is very valuable to our company, we always are trying to make sure we all are 20-20, as we say, on the idea of the effectiveness and efficiency of a company is what fuels our ability to do this.

And so when you’re thinking about our company, we always had to make the trade-off. We knew we had to bring the branch count down because people weren’t using the same. It wasn’t because the customer demand wasn’t there, but that funded the other thing. So when somebody would raise, “Well, you closed branch X or brany Y. Well, if we don’t close that, we can’t do the overdraft thing, we don’t do this.” So it all had to work together. That gives you license in long game.

And I think at the end of the day, it’s worked. The consumer business of Bank of America grows faster than everybody else and has better economics than everybody else all because it has, I think, the fairer set of products than everybody else and provides more financial health, I said it, than everybody else. And I think that’s based on that. But we did get some air cover from the crisis to be able to spend some money, do some things faster, but I think you could still do it. From ’14 to now, we’ve done a lot, and there was no air cover. We basically grew earnings the whole time.

Jennifer Tescher:
Yeah, there have been so many things that you’ve done along this journey. I detailed only a few of them, and you’re starting to be recognized for it. You’ve now been certified by J.D. Power three years in a row for financial health and advice of your customers. And this isn’t just J.D. Power analyzing, this is what your customers are actually saying about you and how they perceive the business they do with you, particularly in the last few years. What are you most excited about? What do you feel most proud of?

Brian Moynihan:
Well, I think we listen to the customers, including the email that you … Google is my email. They all come to me. Nobody else reads them. So every customer can reach out and Holly’s the same way and Aaron’s the same way and their colleagues are the same way. So in all our market presence and all our markets, their emails, we want the information that comes through. We listen to customers, we serve that customer efficiently. What gets me excited is I see from the consumer’s ability, the constant connection with them allows us to work with them even more. So to be able to see in the mobile platform their balances, where they stand, their budgeting, revenue versus expense, which at the end of the day, one of the principles that you advocate heavily is cash flow, is how do we measure cash flow? And I think our app lets you see that. So you can see that in the app. Those are exciting things. And so Life Plan so people can plan out and engage with it, and it’s all goes at the pace of the customer.

Now, behind that, there’s lots of interesting things that people could go on and on about, but the basic principle is that you always have your bank in your pocket. You can always engage with it about where you stand financially, and you can always use it to increase the safety and security of your life. And then we can help people get homes for home ownership projects. We can help people save more money by not having the fees. That all plays out. But that constant connectivity is exciting because it’s a way to share information back to people that will help them live their lives even better. And that’s the value, but that wasn’t possible 15 years ago. It’s possible now.

Jennifer Tescher:
So we talked about the challenges of taking the longer view, but also how you do it and why it’s necessary. But we work with lots of banks and lots of other companies, and I continue to come back to the fact that the key differentiator is who’s at the top and what their priorities are and ultimately what their values are. And my sense is that this speaks to your values, and I wonder if you could tell us more a little bit about what those are and what shaped those for you.

Brian Moynihan:
I think without getting too philosophical about it, I went to law school and I went to law school at Notre Dame when we were trained in the Judeo-Christian sort of tradition, which was treat the people like you ought to be treated. We had a professor, we were going through a jurisprudence class and it’s all these crazy cases, Supreme Court cases and all this stuff, and we’re all thinking so intellectually about it. He said, “This is pretty simple. Treat people the way you want to be treated,” and that you can do any Supreme Case in the court if you look at that around civil rights and all this stuff. And he said, “That’s a pretty interesting way to think about it.”

So we’ve always taken the position that those are our customers, those are our teammates, those are the families of our teammates. Therefore, treat them with the respect, the dignity and a capability that we’d want to be treated as customers, and we’re all customers and think about that. And I think that is where I personally come from, but that’s not unique. It’s just that we then figure out, the team figures out how to not apply my personal viewpoints, but our company viewpoints about that principle.

Jennifer Tescher:
Sure. Let’s widen the aperture for just a minute. I mean, you’re the CEO of a major financial institution and I’m sure people want to hear from you. What are the issues that you’re most focused on, both sides, financial health, of course, that’s going to create headwinds and tailwinds for customers?

Brian Moynihan:
Well, at the end of the day, the pandemic did so many things, but one thing, it put a lot of money into our customer’s pockets, which they have managed to retain a fair amount of that. Unemployment’s low, which is very good. So what you worry about at the end of day, whenever you talk about all the different things that go wrong, the way it’s going to affect us as a company and our customers is going to be through higher employment, lower consumer spending, businesses getting in trouble, small businesses failing. And we don’t see that as a matter of economy, but that’s what we always worry about. And that’s why when we structure the portfolios of products and services, we structure them to be able to stay in economic recession.

But that’s what you worry about. You worry about at the end of the day, if the consumer in America continues to be employed and continues to spend rationally, and sometimes they spend irrationally, and continues to be able to deal with inflation, which it’s leveling out a little bit, we’ll see it play out. I think then there’s not a lot for America to worry about. But the opposite is actually true. So we can worry about Ukraine, we can worry about the Middle East, we can worry about China. But what we really have to worry about is what causes companies to not employe as many people and what causes consumers not to spend so those companies have something to sell. It’s a fairly simple equation.

Jennifer Tescher:
All right, I’d love to hear you make the case. This is a room of true believers for why we all have a responsibility to improve the financial health of our customers, our employees, and our communities.

Brian Moynihan:
So I think it’s pretty simple, when people ask why we do what we do with our customers, our communities, our teammates, and our shareholders. As financial services companies, you really have one thing you do, which is transmit the economy from your customers to the market, market back, the market, not meaning stock market, but the commercial market. That’s what we do. And so we are in the flow to help them live their lives financially. And so we should never forget. And so if you start with that focus, that’s our core role. And then visualize our company, the oldest part’s 240 years old, and I always visualize a bunch of people sitting around saying, “Our community needs a bank to be successful.” And they started a bank. And that bank is number two charter at the OCC. And it’s been around for all these elections except for the first presidential election, it’s been there for every one of them. No matter what happened, it’s been around.

But you visualize that. Now that happened in thousands and thousands of villages and towns around the US, a bunch of those are involved in our company and other companies, and some of them have histories like that here. But they started because the community had to be strong. And I think that’s what we always have to remember. If the community’s not strong, we’re not strong. The community has to be strong, not only in economic strength, but in art strength because that’s a part of a community’s strength. The great quote by Winston Churchill was when somebody said, “Why are you funding the arts in the middle of World War II” and just had the anniversary today and yesterday. And what he said was, “Well, if we’re not going to fund the arts, what are we fighting for?” And so that principle of a strong community from arts basis, from employment basis, from education basis, from financial services provision basis is the key. And that’s what a bank does. And so you don’t need to make it more complex than that.

Jennifer Tescher:
Please help me thank Brian Moynihan.

The financial health movement will only be successful if everyone comes to the table. EMERGE Everywhere is proud to be supported by US Bank, a long time champion on this journey. Thanks for tuning in to EMERGE Everywhere, powered by the Financial Health Network. Visit our website to get the latest financial health insights and resources and join the growing movement at finnhealthnetwork.org.