Reaching outsiders
Executive wants to attract those who aren’t part of the banking system.
Hong Ogle became Bank of America’ s market president for Houston and Merrill Lynch Wealth Management about 2½ years ago—just as the city was about to weather a debilitating oil down turn. We sat down with Ogle to talk about seeing clients through tough times, reaching people who aren’t even part of the banking system yet, and what a Donald Trump presidency might mean for the bottom line.
Q: How was Bank of America impacted by the oil bust?
A: Houston has been amazingly resilient, although no question oil and gas is an important part. But really, for our business, our customers and clients, we are continuing to grow our client and customer-facing workforce, and Houston is one of our key areas for growth. Most of our lines of businesses, we’re still seeing record revenue. I think being able to serve them and hold their hands through this difficult time is how we build relationships for the long term.
Q: Lots of banks overextended themselves by making loans to drillers and oil services companies that they ended up not being able to repay. How did Bank of America avoid that?
A: We have been very responsible in our lending in the past. So, there have been some impacts, and we’ll reserve for it, but really we have not been the worst impacted in the banking area. We have very strict lending rules and guidelines, and we really follow that and try to serve our clients the best we can, but we also want to make sure we’re responsible lenders, and not reaching for the last dollar.
Q: What lines of business are you seeing grow most quickly?
A: The medical area is growing, and there are many areas that we are working on. For example, small-business lending, we lent $147 million last year in Houston to small businesses that are either forming or in the growth stage. And even nonprofits and schools, we lend to them as well.
Q: How is Bank of America trying to help the unbanked population?
A: There are many things. No. 1, we do have financial centers in the areas where there might be low-income populations. And we call them financial centers for a reason, because we really want to be their first line of assistance, not just transactions, you come to deposit a check and you leave. And the second thing is, the 2,600 associates employed by Bank of America constantly go out to the community to educate the community of the basic financial knowledge, and bettermoneyhabits.com was created for that purpose as well.
Q: It’s interesting that you talk about bank branches — aren’t there going to be fewer of those in the future as people manage their finances online?
A: Absolutely, more and more people are using mobile devices. I myself make deposits online, and my kids probably, who are 19 and 22, I do not know if they have seen the inside of a bank. They even use some mobile apps to transfer money, and Bank of America is developing that capability as well. And we do have statistics, how many bank deposits are done on the mobile device, and it’s equivalent of what’s done in financial centers.
Q: So, does that mean Bank of America will gradually close its physical branches?
A: Generally speaking, that might be the trend for the banking industry. Because Houston is a key growth area, we are actually growing the financial centers in key areas, as well as renovating existing financial centers to make them more future-looking. In the future, when you go into a financial center, it will be like a high-tech type of store. Somebody will greet you at the door, and ask you for your needs.
Q: You’ve also had to deal with a quickly evolving legal landscape, as many of the Dodd-Frank Act’s rules went into effect. What impact have those had on the industry?
A: We definitely changed a lot since the financial crisis, and our industry overall is more transparent, more streamlined. We do things more simply, and I really think that is a positive thing for the consumer. We would love to be living in a world where we just do the right thing and not be overlooked so much, however, I do think being more transparent, that’s always a good thing.
Q: There’s talk now about dismantling those regulations, and potentially making the Consumer Financial Protection Bureau much less powerful. Would you be glad to see that happen?
A: As far as regulations, nobody likes to be told what to do. We want to continue to be the industry leader to deliver what the rules and the laws are designed for us to do, voluntarily.
Q: Would you still abide by those regulations, even if they went away? A: Absolutely. We’re going to stay on course.
Q: Some of those regulations are designed to guard against banks becoming “too big to fail.” Bank of America is huge — do you think that size is a problem?
A: Although it is a big bank, we do operate it more like a local bank. There are 87 markets like Houston, and each market has a president, and a lot of the decisions are made locally, and I would say we are gaining more autonomy every day. And I think that makes a big bank feel smaller.
Q: As you know, Wells Fargo has gotten into a lot of trouble for pushing more services on customers than they really need, and even creating fake accounts. How do you make sure that kind of thing isn’t happening in your sales operation?
A: At Bank of America, we try to put our customers at the center. We try not to have the bank’s agenda to do more things with you, we really put you in the middle. You may have a checking account with us, and meanwhile we want to understand who you are, and satisfy all of your financial needs. For example, if you just graduated from college and have loans, we can work with you on that. If you’re trying to buy a car, eventually, when you’re financially independent, we want to make sure that we understand who you are, instead of saying as a bank we would like to sell you more products.
Q: There are certainly lots of ways to learn more about people these days. How do you gather that information? A: We have 45 million households that do business with us, so just studying their credit card habits can really tell us a lot, whether they’re buying things or trying to be conservative and saving more. We definitely use those data and information to help deliver the right financial solutions to them.
Q: Another thing you’ve had to manage is the rise of online wealth management services that offer advice at lower rates. How are you dealing with that competition? A: Part of Merrill Lynch is an arm called Merrill Edge, that is a self-directed service. In November, we are rolling out a pilot, a financial product where you can go online, answer the questions and choose from several portfolios. The difference between us and several of the competitors you mentioned is that those are mostly automated and/or computergenerated, programmed products. We are going to have our chief investment officer behind our product, so you are going to get a superior product at a very similar price.
Q: Financial services is still very male-dominated. What would help more women get to your level? A: Bank of America has done a great job. More than 50 percent of our sales force is women, and 40 percent of our management. I would say Bank of America has been intentional about promoting women. It doesn’t mean you promote someone only because they’re women. I think you can find women who are qualified. But if you’re not intentionally doing that, sometimes you’re more likely to promote someone who’s like you.