Bank of America: Zelle Transactions Replace ‘the Check Is in the Mail’

Bank of America’s latest earnings results show that consumers’ embrace of digital banking — particularly P2P transactions — continues to grow by double-digit percentages.

And, along the way, consumers’ financial health, and propensity to spend, is at least as strong as it had been before the pandemic.

As CEO Brian Moynihan said on the call, though some observers might wonder whether “talk of inflation recession, other factors would [result] in slower spending growth. We just don’t see here at Bank of America.”

Indeed, year to date spending growth of $3.1 trillion, through September, is up 12% compared to last year. Spending growth remains notable, particularly, in the travel and entertainment verticals. The company said that transactions in this vertical were 12% higher, with dollar volumes up 20% year on year.

Customer average deposit levels as of the most recent quarter were above pre-pandemic levels, where the consumer banking average deposits were $1 trillion, up 7% year on year, as noted in company supplemental filings. Consumer deposit accounts with less than $2,000 were up by 5x vs. pre-pandemic levels, and with between $10,000 to $20,000 were up by a multiple of 2x.

Management noted on the earnings call that late-stage delinquencies (of at least 90 days) remain at near multi-year lows — in fact 54% lower than had been seen before the pandemic. The overall delinquency rate, with card payments at least 30 days past due, was 1.4% as of the most recent quarter, down from 2.0% at the end of 2019.

“There’s plenty of capacity for borrowing,” said Moynihan. BofA’s stats show that during the quarter, the company added more than 400,000 plus net new consumer checking accounts and added 1.3 million new credit card accounts.

Bank of America’s results and commentary cheered investors who — at the start of trading on Monday (Oct. 17) — sent BofA’s stock up 4% and the overall markets 1% higher.

The Digital Shift

In evidence that consumers are pivoting away from paper-based transactions, there were 44% more Zelle transactions than checks written, at a respective 167 million transactions, vs. 116 million checks. That digital shift came as there  were 17.7 million Zelle users in the third quarter, up from 15.9 million last year.

Bank of America also said that it had 1.9 million digital sales, up 36% year on year, and the percentage of consumer sales made through digital channels stood at 48%. Management stated during the call that, at a roughly 50% share, that percentage equates to the volumes of transactions that would be seen across 4,000 financial centers.

In commentary during the call, CEO Moynihan noted that virtual voice assistant Erica is a “primary interaction” method, with 133.6 million interactions in the quarter, and 31.7 million users in the quarter, up from 104.6 million and 22.9 million last year.

The company logged 56 million verified users, with 43 million active digital users in the quarter.