Dive Brief:
- Bank of America is expecting its annual $3 billion spend on new technology initiatives to increase by 10% as a result of tax reform and savings, according to CEO Brian Moynihan, during the company's Q1 2019 earnings call.
- The bank has invested about $20 million in "new initiatives spending" since 2012, Moynihan said, during the bank's Q3 2018 earnings call. Bank of America has maintained its spending pace since, representing about one-third of its overall annual tech budget.
- Q1 expenses were up about $150 million from Q4 2018, said Moynihan, but was "partially offset" by spend on technology and marketing initiatives. Costs for tech and marketing are expected to rise for FY2018 with continued investments such as "physical plant rejuvenation" and adding more personnel.
Dive Insight:
Banks have deep pockets when it comes to technology. They are attempting to meet the consumer wherever they are, which means enabling account connectivity and transactions anytime and on any device.
The online and mobile movement spurring expenditures on new technologies is furthering investments in internet services, crytocurrencies and payment systems, according to Bank of America's most recent annual report.
Bank of America and JPMorgan Chase have assets greater than $100 billion, which means their technology investments are likely to grow, as Moynihan indicated. "We're not overspending here; we're going to spend what we need to do to drive this company forward," he said.
JPMorgan spent nearly $11 billion on technology in 2018 and Bank of America spent about $10 billion. JPMorgan's $11.5 billion tech budget for 2019 is divided equally between maintaining IT and innovative change whereas Bank of America spent about $10 billion.
The biggest banks spend less on IT maintenance compared to those with assets less than $100 billion. Though regardless of the size, most banks spend equally on modernization.
