A Bank of America Corp. executive said that the company can keep a leash on costs in the consumer banking business even as it sets up 500 new branches and overhauls 1,500 financial centers.
The banks' efforts to streamline its sprawling operations has allowed it to drive down the efficiency ratio, which measures expenses as a share of revenues, to 51.53% in 2017 from 61.1% in 2014, according to an annual filing.
Still, non-interest expense exceeded $17 billion in 2017, and the bank should be able to lower those costs by taking out "paper statements, paper checks, paper processing," Dean Athanasia, president of preferred and small business and co-head of consumer banking at Bank of America, said during an industry conference.
The bank used to incur about $5 billion in expenses "to move cash and checks," he said. While that expense has "come down a bit" due to the growing popularity of digital services such as Zelle, a platform bank customers are increasingly using to send and receive money, there is still room for the company to reduce those costs.
"It takes a lot to go through $5 billion. So we'll be working at it, but it's constantly and consistently coming down," the executive said.
The company has reduced the number of branches to roughly 4,500 from 6,200 in the past few years, according to Athanasia. While fewer than 1 million people visit the bank's branches every day, overall transactions handled by branches are declining as more customers are opting to use the bank's digital services, he said.
Athanasia said the efficiency ratio should stay below 50%, a level achieved during the first quarter.
The bank is opening 500 branches in nine newer markets. It expects those branches to "break even" in two to four years, depending on their size, he said.
