Bank of America is only replacing 75% of employees who leave, but doubling the budget for AI

It's been a while now, but Bank of America is still at it. Instead of firing people (although this sometimes occurs), it waits for people to leave and it doesn't always replace them.

BofA CEO Brian Moynihan explained how this works in his market-moving conference speech yesterday. BofA now employs around 210,000 people, down from around 213,000 people at the start of the year, said Brian. 

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The bank has cut headcount by 3,000 people by only replacing around 75% of people who leave. 

Brian said BofA has an employee attrition rate ranging from 8% to 8.5%. Based on current headcount, the implication is that around 1,400 people leave each month, at least. 

Brian understated this and said that 1,300 people leave the bank each month. When they do, he said BofA only replaces 1,000 of them. The other 300 jobs must be 'owned' he said. More prosaically, they must be done by existing staff.

Fortunately, AI is around to help with this. "In the end of day, our teammates have got to use AI to make our company better and make our clients a better experience," declared Moynihan. BofA now has "150 use cases implemented" and is deploying AI into "more work," he said too. This work includes audit, legal and other areas. And BofA's 18,000 coders have "saved" 10-15%, which is being redeployed.

Next year, Moynihan said BofA plans to double its "expense budget" for AI. It is not spending wildly, though. "Each idea is costed out to the nth degree to say, I spend X, I get back Y and here's the payback and et cetera," he explained. 

While AI enables more work to be done by fewer people, it seems that BofA's employees are still clinging to their jobs. Before the pandemic, the attrition rate at the bank ran at 12%+. Since the pandemic it's been down to 8%. This low attrition rate made it necessary for BofA to actually cut jobs two years ago. If more people could be encouraged to quit, it would make ongoing cost-cutting easier. Unfortunately, people seem to recognise that AI might make it harder for them to find jobs elsewhere. 

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