Say what you want to about Bank of America Corp (NYSE:BAC), good or bad. Just don’t say the company doesn’t have its finger on the pulse of consumers, and on the pulse of up-and-coming consumers in particular. In turn, don’t fret for the future of BAC stock. BofA truly knows where it stands and what it needs to become to remain relevant a year from now as well as a decade from now.
The latest layer of evidence for this argument? Bank of America is test opening a few mini-branches without human tellers on-site, steering its customers to self-service solutions.
The premise sounds concerning, to customers and BAC shareholders alike. People want the comfort of dealing with other real people when it comes to something as important as their money, right? If this is the shape of things to come, BofA could be doing itself more harm than good.
As it turns out, consumers are becoming more than comfortable with a lack of real people providing service. Indeed, millennials say they prefer and expect automated, robotic, virtual service.
No Humans Needed
Some customers have already seen them, though most haven’t; BofA has only opened three such branches. But, if it works out, BAC shareholders can presumably expect to see more branches without employees, where customers take care of themselves.
These venues aren’t capable of doing everything a manned branch can do. Namely, patrons can’t get a check cashed at a virtual Bank of America branch. They can, however, access an ATM, and can converse with a live person at another location, if need be.
These branches are expected to cost less to operate than a traditional branch.
It’s not the only step toward virtual and self-service options Bank of America took last week, though. Its brokerage arm, Merrill Lynch, unveiled what it’s calling Merrill Edge Guided Investing, which essentially bridges the gap between professional (human) advisors and online (largely algorithm-driven) advice.
Even the smallest of clients can get a tailor-made recommendation from a team of experts based on a specified investment goal.
Think of it as the next step in the evolution of robo-advisers, whose popularity reached a critical mass last year.
The New Norm
It’s something that was unthinkable just a few years ago. So how did things change so much, so quickly?
These paradigm shifts toward self-service and digital service is merely a reflection of society’s preference, and though millennials are driving the change, older consumers are getting on board.
Giving credit where it’s due, Retail Customer Experience’s Laura Miller summed it up best in 2015 when she observed:
“Generation Z (ages 2-19), will be the generation of DIYers. They are digitally native, more comfortable with a smartphone than a landline; they prefer a tablet over a magazine. They have never known life without Google, the overwhelming worldwide Web and on-demand/online TV shows.
There are two ways retailers can leverage these differences. They include:
- Provide self-service options in higher numbers (more machines).
- Provide more opportunities to do it yourself (more functions).”
Seem familiar?
Miller is hardly alone in suggesting that the rise of the technology-savvy consumer is shaping the future of service. Kiosk Industry Advocate President Ben Wheeler also noted that year:
“The study, conducted by Aspect Software, found that millennials prefer self-service customer service over more conventional customer service practices. The study identified that millennials would rather solve a problem themselves than consult a customer service representative.”
And of course, bear in mind that this era’s millennials will be the next era’s more affluent consumer segment, earning and spending more money, and talking out larger loans. Indeed, some believe millennials will outspend baby boomers this year.
In that light, BAC stock holders may wish Bank of America was moving faster than it is on the self-service and digital-service front.
Bottom Line for BAC Stock
To be clear, BofA is still primarily a human-powered company, and will be for some time. It’s encouraging to see the big bank at least building the tools for the future though, if it needs to turn up the heat as consumer preferences change in step with technology.
Few other outfits are doing it anywhere near the extent Bank of America has already tested these waters.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
