Bank of America plans to spend $4 billion on AI and new tech

Bank of America is directing $4 billion toward new technologies this year, including enhancements of its artificial intelligence tools for both clients and advisors, chief executive Brian Moynihan said Tuesday.

“AI has moved from cost savings ideas to enhancing the quality of our customer interactions,” Moynihan said in a call with analysts. He pointed to the bank’s AI advisor and client insights tool, which it says has delivered more than six million insights this year so far to financial advisors.

Major banks are going all-in on AI, from hiring talent to introducing AI-powered tools and assistants, and adopting hundreds of new use cases across their many businesses — with more still in development.

Bank of America, the second-largest U.S. bank with $3.26 trillion in assets, says it spends $12 billion annually on technology as a whole, directing a quarter of that to a swath of new technology initiatives in 2024. The bank’s virtual assistant, Erica, reached 2 billion interactions in April, with bank clients engaging with it approximately two million times per day.

The bank ranks 15th in the Evident AI Index, which assesses the AI-preparedness of the biggest banks around the world. That puts it behind competitors including JPMorgan Chase, Wells Fargo, Goldman Sachs, and Citigroup.

Bank of America topped Wall Street estimates in the second quarter, sending its stock up on optimistic guidance for the rest of the year.

Given its outsize consumer banking business, Bank of America is the most sensitive of all its peers to net interest income (NII). Its NII was $13.7 billion, a 3% decrease from $13.83 billion in the second quarter of 2023, it reported before markets opened Tuesday. But Alastair Borthwick, the bank’s chief finance officer, reassured investors during Tuesday’s earnings call that the second quarter was an NII “trough.”

The bank raised its guidance on the metric, which is the key way banks make money, to $14.5 billion for the year, as it expects NII levels to rise for the remainder of the year.

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Bank of America stock climbed 3.5% on Tuesday morning.

The firm saw $25.4 billion in revenue, up slightly from $25.2 billion during the same quarter last year, the company said Tuesday. That also beat analysts’ revenue estimates of $25.22 billion, according to data compiled by FactSet.

Net income, however, slipped almost 7% to $6.9 billion from $7.4 billion a year earlier. Despite the fall, profits surpassed Wall Street’s projected $6.41 billion.