Bank of America is setting its sights on increasing consumer profits significantly by reshaping its credit card strategy. This move aligns with its ambitious goal to enhance profits from the consumer division, targeting $20 billion annually by the end of the decade—something that’s been accomplished only twice in U.S. banking history.
This month, the bank is expected to unveil new rewards incentives for cardholders with substantial account balances. Executives mentioned that part of this overhaul involves investing millions and utilizing artificial intelligence to attract new customers and encourage existing ones to engage more with the bank.
“We’re really focusing on growth,” shared Holly O’Neill, who heads the consumer business at Bank of America. “Cards play a significant role in our growth strategy as we hone our outreach.”
To meet its goals, financial institutions like Bank of America are adopting varied strategies, from expanding their customer base to cutting costs. As of now, the bank services about 69 million consumers and has 3,650 branches across 39 states, with ambitions to reach 75 million customers by 2030.
Since the 2008 financial crisis, the bank has steered clear of high-risk borrowers, yet it’s benefiting from technology that allows it to increase loan approvals. In a recent interview, O’Neill emphasized that AI is vital in processing more loans efficiently without compromising safety standards.
Unlike rivals, such as JPMorgan Chase & Co. and American Express, which spend heavily on premium credit card perks, Bank of America is concentrating on no-fee cash back options. The bank aims to strengthen partnerships with existing co-brand associates like Alaska Air Group and Norwegian Cruise Line Holdings.
Over five years, Bank of America’s credit card satisfaction ratings have fluctuated. From being fifth in 2024, it climbed to second last year. However, many of its no-annual-fee cards still rank below the sector’s average in consumer satisfaction.
“We have a solid customer base, but there’s room to enhance our offerings,” stated Mary Hynes Dorosh, responsible for consumer products. “Cashback has worked well for us, but we’re thinking we can expand even more.” However, boosting incentives does come with costs. Lenders typically take three to five years to break even on these expenditures. Recently, Bank of America raised its cash back on select categories to 6% for new cardholders.
Banking technology is also enabling lenders to tap into more data sources, allowing for tailored customer outreach, even identifying potential life events like marriages or home purchases. This capability helps in evaluating loan applications, improving the chances for those with limited credit histories.
The bank is embracing AI to revamp its mortgage processing as well. As interest rates fluctuate, it is preparing for a potential surge in home buying. “We’re ensuring our mortgage capacity is robust enough to respond quickly if rates drop,” O’Neill noted.
Additionally, last year, the bank opened and renovated numerous branches, planning to expand further into high-growth locations. Senior staff members at these branches will handle both significant tasks like mortgages and simple transactions that some customers prefer to manage in person.
For instance, at a new branch on Manhattan’s 59th Street, the redesigned space resembles a hotel lobby rather than a traditional bank. O’Neill mused, “I wonder when we might not even have windows anymore?”
Currently, about 55,000 people work in the bank’s financial centers, though this number is expected to decline as efficiency technologies advance. O’Neill mentioned that the speed of workforce reduction will depend on how well customers embrace these new technologies.
For now, the bank is integrating an AI tool called Erica into employees’ workflows, which O’Neill likened to providing an extra “brain” for staff. Over time, this tech is anticipated to enhance staff efficiency and eventually reduce the workforce.
Wells Fargo analyst Mike Mayo noted the critical question remains whether these digital tools can help Bank of America meet its ambitious efficiency and profitability targets. He described the goal as rather unpredictable, suggesting it might catch observers off guard.
“It would be a pleasant surprise if BofA can utilize its tech advantages to speed up these trends,” he added, indicating the outlook still feels uncertain.
