Erika Najarian: Got it. Thank you.
Operator: We’ll take our next question from Mike Mayo with Wells Fargo. Please go ahead. Your line is open.
Mike Mayo: Do you expect the efficiency ratio expenses to revenues to improve from 63% and when? And I guess this is a two-part question. One is expenses. As you said, it’s down every quarter this year and you’re guiding for the fourth quarter. Slide 5, the digital adoption, it’s about three-fourth for your clients across the firm. So the sustainability of those digital trends to help lower expense or control expenses, given some of the headwinds. And especially given the threat of big tech and fintechs, the sustainability of the digital trends and why you think you have an advantage on so many others. I think they have the advantage. And the second part of that question is revenues. Your NIM is a bit over 2%. Went up a little quarter-over-quarter, but it was closer to 2.5%.
Going back five years and maybe long term, it should be 3%. I’m not sure. So what do you think is a normalized NIM? Because that would help the efficiency ratio and the trend for expenses and ultimately, the efficiency ratio? Thanks.
Brian Moynihan: So Mike, I think the expenses come down, revenue grows, the efficiency ratio continues to improve. One of the big differences between us and other companies you can compare us to is the size of our Wealth Management business relative to the size of the company is large. And as you know, that’s a business which we continue to work to make more efficient, but is the least efficient business in the platform. So Lindsay and Eric continue to drive the efficiency there. So yes, we expect the efficiency ratio to continue to improve. And part of that will be as the net interest margin normalizes, we normalize the size of the balance sheet, given it’s grossed up for a lot of reasons through the pandemic and stuff and you kind of fine-tune it, you’ll get a little more effectiveness there.
In the past, we ran up to [2.30%] (ph) in NIM in a sort of normalized sort of environment, and you’d expect us to keep moving up from there. Now it will be it’ll be bouncing around here as we work through the trough in NII that we described, which is we’re sort of in the middle of starting this quarter into the first half of next year. So, Mike, and as you know, it’s all about management heads, and that’s — last year, at this time, we all talked about the great resignation or last year last summer and how we had to hire people, we over-hired because the issue was could you hire fast enough to get what you needed this year. We’re able to bring that excess back out of the system and ended up kind of where we wanted to be at 212,000. As we think forward, we continue to reposition people around the company who are freed up because of that digital application to other things.
So in a broad sense, our Consumer business is down from 100,000 people to 60,000 people and continues to drift down as we continue to use the — that’s the place of the most leverage in digital across the board, you continue to get less branches, less ATMs. You can see the statistics on the chart. More customer interactions and more customers, that’s a pretty good trade, and we continue to drive that, including sales in digital that we disclosed in the back of things. You’re running nearly half the sales and, frankly, with improvements on the checking account opening, we can drive another round of growth there. So that’s what we’re going to do. We continue to drive the efficiency ratio to a level, and we’ll see where we can get it to.
Mike Mayo: And then just on that big picture question, I mean, you’ve invested for over a decade in your data and tech stack and digital engagement. And now we have AI and GenAI as a new opportunity and a threat. Why do you think — or maybe you don’t, why do you think that you have an advantage versus, say, smaller banks, fintechs or big tech?
Brian Moynihan: Well, we have an advantage in that we’ve been applying it for a number of years now. So effectively, Erica is a form of that and now has 17 million customers working on it everything. And so think about that this quarter, I think there’s [170] (ph) million interactions, whatever the number is, 180 million interactions, something like that. If you think about that, Mike, in the days gone by, every one of those would have been an e-mail, a text or a phone call. And so it’s obviously tremendously more efficient. And we’re continuing to prove we brought it out to the CashPro side, which is the Commercial side. So that helps. If you think about in the $3.8 billion we’ll spend in ’24 on technology initiative spending, Aditya and the team continue to use the techniques that you read about in the paper to increase the efficiency of that development effort.
And it’s probably 10%, 15% in the short term, building up higher and as people get more and more used to it, and that will allow those dollars to be stretched even further. So we think that’s a near-term application that we’re already doing and has high probability. And then, frankly, if you think about our capabilities, if you look, we have nearly, I don’t know, 6,000, 7,000 patents out there, 600 on AI already related — machine learning-related activities sitting in the application filed. We got a lot of inventors in this company. And so we feel good about our ability to compete against the types of people you said. But by the way, we use some of those people who might compete to actually be providers to help us do this stuff. And some of the big tech companies are — as you listen to them, they have — it’s a business for them to sell that AI capabilities to companies like ours to make us more efficient.
