Welcome to Breaking Banks, the number one global fintech radio show and podcast. I’m Brett King. And I’m Jason Henricks.

Every week since 2013, we explore the personalities, startups, innovators, and industry players driving disruption in financial services. From incumbents to unicorns and from cutting edge technology to the people using it to help create a more innovative, inclusive, and healthy financial future. I’m J.P. Nichols.

And this is Breaking Banks. Welcome back. I’m Brett King, your host.

And joining me in the hot seat this week is my good pal, Michael J. Casey. He’s worked with us for, actually, it must be close to a decade now, Michael, is it? Wow. Come on.

Really? Yeah, it was. It was 2014. We did exponential finance together in New York and then you came on as our Bitcoin correspondent for Breaking Banks.

Bitcoin correspondent. That’s right. I love that title.

Breaking Banks, Bitcoin correspondent. It was. Yes.

Yes. It’s a good title. I like that one.

Absolutely. For those that don’t know you, of course, you’ve done work with MIT Media Lab. You’ve been a journalist, written for the Wall Street Journal and others.

Right. You ran the Consensus Conference and, of course, worked with Coindesk extensively. And you’re now building this entirely new decentralized AI society, DAIS, which we definitely want to get into.

But for those that aren’t totally familiar with it, where are you based and what do you spend most of your time doing these days? Right. Well, I’m based in the New York area, not far from where you used to be. I’m in Pelham in West Chester.

I’ve been here ever since we met, which is before that I was, in fact, 2009. And I am, yes, very much focused these days on DAIS, the decentralized AI society. That’s the thing that’s caught my attention.

I left Coindesk in March, around the same time that I published a book. And Coindesk had a new owner and things kind of just went different ways. And I ended up launching into this DAI concept that I think is really just one of the most important I’ve ever been involved in.

And that’s getting a lot of attention. So doing a lot of traveling like you, I’m weirdly off to Bangkok next week for DevCon, the big event. I can’t believe I’m going to miss you in Bangkok while you’re there.

I’m going to be there. You’re there in Europe or somewhere. So I’m in Milan.

I’m going to go home. I’ve got a ridiculous travel schedule. I’ve got to go to Miami.

I’m advising a company called Proppy. This is wonderful. Finally, they’re getting on-chain real estate figured out, which is one of the things that drew me first into the space, the idea that we could get property deeds on the chain.

And Proppy have figured it out brilliantly. So I’m helping them with their conference on Thursday, the Proppy Summit in Miami. But then I get on a flight and I go to Perth, my hometown, for my 40th school reunion.

Oh, that’s next year. There you go. So that gets done.

The next day, I fly to Bangkok where I’m involved in serious events, the serious events in and outside of DevCon. And then on Wednesday, I fly to Seoul, Korea for the Upbit conference because I’m speaking there. So yeah, speaking circuit is driving me all over the place at the moment.

That’s going to be one of my – I’m looking forward to being able to put my feet up at the end of that. I mean, it’s not a bad thing. I think for me at least, getting back on the road, it’s been – it’s taken a while to recover from the COVID days and also people reset budgets around virtual events and things like that.

So it’s tougher. But yeah, it is sort of – but I think it is starting to sort of reconfigure and this adaptation sort of push, which is really keen. So the decentralized AI thing, let’s talk about that.

But you’ve come from a DeFi world. It’s interesting. I’ve never heard anyone sort of talk about DAI, right, in the way we would talk about DeFi.

No, I like it. I like it. But where – obviously, if you’re going to have DeFi and you’re going to make smart DeFi, smart contracts and things like that are going to be AI-based.

There’s a lot of effort and thinking going into sort of smart contract development right now. Stablecoins are sort of firing and there’s a lot of interest in that. But obviously, you’re going to need artificial intelligence to run smart contracts.

Why do you need decentralized artificial intelligence? Is it the same as open AI, DAI? Yeah. So I think that if you talk about the intersection of AI and DeFi, you’re coming at it more from the role of blockchain and crypto solutions – or rather, sorry, flip that around, AI solutions for blockchain and crypto, right? So there’s the idea that AI can be used to write smart contracts, as you said. There is this idea that you’ll have these agents that are out there trading for you and that a variety of functions, including software development, could be brought to bear inside the blockchain community and ecosystem with AI.

Decentralized AI really is about the opposite. It’s about taking all of the inputs and the infrastructure that builds AI itself and putting it into a decentralized environment. Now, it’s not an easy thing to do because blockchains are, as we know, inefficient and dispersed and distributed.

But it brings with that enormous possibilities to address some of the huge concerns that many of us have about AI, right? The idea that the models and, most importantly, the actual economic structure underpinning it – the very idea that AI could be owned by just six big platforms – is something that we know is a fairly dangerous state of affairs given what we live through with Web2. So, we take Web2 and all of that concentrated control and the book that I wrote with Frank McCourt called Our Biggest Fight really details the challenges that that has posed for society, the abuses, the loss of control, the dopamine-driven strategies, all of that stuff. And it takes it into the AI world and puts it on steroids.

So, we really need to decentralize. I just 100% believe this. And yes, there are big challenges to get there.

There are engineering challenges, capital challenges, a variety of other challenges. And we need to figure out how to unlock those because there’s a lot of people building in this space. It’s a nascent organization, but there are just countless people doing decentralized compute and decentralized agents and decentralized data provenance solutions so that we know where our data has come from and going to and coming out of an AI model.

A range of different pieces that fit together and form what I’m calling the decentralized AI economy. There’s a lot to unpack there. I mean, just to even get to the basics of the underpinning models behind AI, LLMs, LQMs, so forth, GANs, RANs, CNNs, whatever.

As we’re talking about that, how do you build a large model for backward propagation and weighting on a blockchain given the challenges with transactional throughput and all of those sort of things? Yeah, yeah. No, that’s a very good question. But it’s also like one of those questions that people who are smart and have alternative ways of looking at things are eager to address because in some respects, it’s a loaded question.

I don’t mean that to be disparaging, Brett, but to say on a blockchain is in itself like, okay, is everything going to be on the blockchain? No, not necessarily. So how do you get around the latency and the computational problems that a blockchain possess, but still have all the benefits of it? So it is actually, I think, the intersection of blockchain solutions in part, in terms of keeping a log of aspects of the data, for example. But it may be that really the most important, powerful things are things like computational compute, which may not have to be as computationally intensive as it currently is in things like zero-knowledge proofs and homomorphic encryption, but rather using secure enclave computing so that the devices themselves can be… You can find ways to sort of take a lot of that stuff off-chain, and where you need to, you bring data recognition and input recognition into a decentralized environment.

And then you can start to think about, do we even need large, the word large, language models as a foundational structure? Or we could do multimodal approach where… Multimodal, right. Yeah, yeah. And then they’re doing the compute in a parallel way, right? So some parts of it done elsewhere in here, and then you build these modules.

And so I find, and I’ve sort of learned from Jake Bruckman, who’s, I think, been one of the leading people in the venture space speaking about this from CoinFund, that what you find when you have these conversations with a lot of people who are deeply embedded into the current economics of AI, and some of it could be self-serving, but I think it’s also just that they don’t have a way of thinking any differently. They’ll just say, that’s impossible. And they’ll say that’s impossible because there’s this, essentially, a flywheel between NVIDIA’s chips, Amazon’s storage capacity, open AIs and Facebook’s foundational models, and they’re all built to each other.

And they, okay, you have to do this, you have to do this. Self-reinforcing. Right, self-reinforcing.

I think this is, okay, I’m not an engineer, but I am actually able to understand narratives and the traps of thinking and the politics and the economics that drive a lot of these misplaced… Throughout history, as you would know, as a futurist, therefore you’re as much a historian as you are a futurist. A pastist, yes. A pastist, yes.

You’ve seen how, oh, this is the only way you can do things, suddenly gets broken by somebody who does something radically different. And I just think in AI, the future gets sped up so fast that we’re already looking… You could already argue that the LLMs are dinosaurs, right? You could make the case that what ChatGPT was three years ago is a ridiculously outdated concept. And so, I don’t know.

I think that’s the point. But the thing is, yeah, to actually achieve that, it is going to need some engineering breakthroughs. It is going to need more capital.

It’s going to need all these other things. And let’s unlock all that innovation to be able to do so. Well, the other element that you’ve really honed in on, which I think is going to be increasingly important, is if we’re having all of these IP fights and arguments, and obviously, I want to get into your book as well in a moment, but over who gets the right to use that data, and how much of your data, when it’s put into an AI model, when does it no longer become reflective of your intellectual property, for example? Now, as part of that, being able to know where the data came from that then has led to this model that’s exhibited means that we would have to shift from a view of data privacy and protection, which is sort of the European GDPR frameworks and so forth, to something more of data ownership, and then that traceability, which would seem to imply that we need something like blockchain auditability to be able to track where that original data source is and how that goes into the weightings of these algorithms, which is that sort of… Oh, 100%.

Like a phenomenon? I think it’s… Yeah, no, 100%. So, I’m actually involved in some projects that are trying to really advance the idea of data ownership as a principle, and possibly working with some folks in Bermuda around some pilots that would do with DNA data, right? Because now DNA data is essentially digital data, it’s the same, it’s just a form of digital data, right? But it’s very sensitive, it’s extremely important that it be treated legally and with compliance with all the demands that come with that. And the only way really… Do you really want your kid’s DNA on a public blockchain, right? Yeah, of course you don’t, right? But that’s not what something that is delivered in a provably computationally confidential manner would be.

It would not be your kid’s DNA. It would be valuable data and insights that can only be understood in a vast mass computational structure as being valuable. But then, by creating this secure channels between whatever data outputs you’re coming and the individual for whom it’s coming, you could actually design valuable treatments that are tailored to that person’s DNA without the system knowing it, right? This is the power of cryptography and zero-knowledge proofs and a variety of other mechanisms that you can bring to bear here.

So, we don’t need to think about it in those terms anymore. You’re not putting your DNA on a public blockchain. You’re using the blockchain to create secure assets so that that information can be represented as, say, an NFT.

But you’re not putting all the information about it out for everyone to see. But I think that the reason why I’m raising this is because, to your point about things like GDPR and everything else, if you’re going to be operating on this model, and this is where people say that AI is going, that medical AI is going to be all about tailored solutions for the individual. How are you going to do that? How are you going to be able to have that, here’s my data, and I want you to come back to me with something for me, unless you have created some structure of ownership and some way to trace that ownership? So, you need to trace not only based on, by the way, where it has come from, you need to prove that you have the permissions.

So, those permissions are things that will often have time bound. 90 days. You’ve got 90 days to work with it, and then it comes back to me.

We’re exploring the idea that you could create financial models around that, that when aggregated, those permissions look like you’re a banker by training. It starts to look like some sort of interesting forward contract that you could build models around and sell as a security. I mentioned securitizing those assets, those permissions, if you like, and having large finance come in, back up, and refinance what are ultimately deals between, say, research labs and the individuals who are providing these pools.

So, all of that requires, I think, all of that provenance that you’re talking about. I’m sort of intrigued as to, you know, we put a lot of effort globally into open banking and open finance recently. I’m sort of surprised we haven’t had a similar initiative in terms of open health data.

Yeah. Because if you look at the advantages in using artificial intelligence to mine health data from a basis of just even better diagnostics, the evidence is abundantly clear right now. So, why isn’t it that we don’t have open health initiatives? Well, I think it’s just because of what we just talked about.

It’s the most sensitive data that’s out there. So, what that means is that just reinforces the existing paradigm that this is something that a centralized entity has, and we have to be extremely strict about the usage of it. Because what you’re basically saying is, hey, don’t worry about all those strict rules anymore.

We’ve got a whole other way to protect that information. And now, it’s not about telling whichever health insurer or hospital that you’ve got this honeypot of data that you need to be incredibly restrictive of. But rather, it’s an open system.

It’s just that all the technology proves it. I think it’s partly because we’ve gone so heavily into the rules, the HIPAA rules and others in the United States and similar ones elsewhere, that say you can’t let this data out. It means that it blows bureaucrats’ minds when you say, no, open the whole thing up.

They say, no, you can’t do it. It’s very hard to have the conversation. I found that with these conversations about money laundering and banking and everything in this world, by the way.

There’s obvious analogies for using this data for better diagnostics and so forth. But the biggest problem countries like the United States have, the US in particular, is the massive increase in national health care costs that we’ve seen since the 1980s. And if you’re going to try and reduce the cost of health care, and you’re looking at efficiency gains, you’ve got to be looking at the data.

It would seem to me to be a fairly logical process. And if you’re going to do smart contracts to automate as much of the health care system as possible, again, you’re going to need open end data systems. But you’re going to need this in every part of society.

It doesn’t really matter about the protected nature or the special nature of health data. I mean, you could argue that company intellectual property or financial transactions, your bank balance is similarly should be protected. But you can’t have protected data in an open AI system that’s going to allow you benefits at scale.

These two aspects of the system are sort of clashing. How do we get policymakers to catch up with the rate of technological change that’s possible here that’s going to produce all of these societal benefits, including massive resource efficiency gains and things like that? Yeah, look, I think you need some sort of financial whales to emerge who have real interest in this in a way, because I think that’s where policymakers tend to listen. And I can’t listen to Facebook and Google and Co.

and their interest because they’re not built around these models unless they are actually going to live up to what they say they’re doing in terms of Web 3. They’re not. And so you need to find whoever it is. Is it the pharmaceutical companies? Maybe, but I tend to think that they’re also incredibly invested in the incumbent model, which tends to be a closed system of research and owning all of these high-scale blockbuster drugs.

Does Pfizer really want to have the system blown up when they can just make billions and billions of dollars in producing a COVID vaccine that’s endorsed by the government every year? So there’s always this whole problem of the incumbents and whether or not they have an interest in this. And then if it doesn’t have the same sort of immediate economic payoff, you don’t get them doing it. Now, there should be.

There should be folks who are just going to invent somewhere the most awesome treatment, and then they can take it to Brazil, and Brazil just suddenly uses out this whole tailored genetics treatment for various types of cancer or something. And the whole world then wants it, and this company is just going to be worth loads. And that will be the leverage with which you go somewhere, but it’s chicken and egg in a way.

So, yeah, I mean, look, we need to be able to demonstrate this so that people will buy into it, both policymakers and investors, the power of this, rather than just talking about it. But that, unfortunately, requires some unlocking of these barriers to be able to produce the proofs of concept, the pilots, whatever it is, to show that it works. And I think this is always a, yeah.

Let’s, you know, because I know we’re running out of time, but I want to give some attention to the book. I know it came out a little while ago, but Our Biggest Fight, Reclaiming Liberty, Humanity, and Dignity in the Digital Age. Where does the book fit into this problem set? Yeah.

Yeah, like, I feel like the book is setting the stage for what this decentralized AI conversation is all about. Because the book was, it was not exactly backward looking, but it was a snapshot in time that said, here’s what’s wrong with the web as we’ve created it, the internet that we were left with after the turn of the millennium, when we kind of defaulted to this data-driven social media web 2.0 concept, that we went away from this vision of the internet being a fully sort of open access, decentralized. Everybody would be publishing to everybody, and we’d all read it to them.

A model, in fact, where it was no longer decentralized because you had the real gatekeepers being these gigantic corporations. The fact that, you know, Gmail is the default for every email now. The fact that, you know, Google and Facebook essentially own and control more than 50% of the world’s digital advertising, right? So, we created this incredibly monopolized environment around information, and all of the manipulative strategies that were tied to that are only now just being realized with all the harm that that’s done to people, their free will, the kids that have left suicided, the varieties of impacts that have come from algorithms that are deliberately designed to treat us in the words, the famous words of Bruce Schneier, as products and not customers.

Right. Mean that, you know, we created a very toxic system, and the way that Frank McCord and I viewed it was through the lens of political science, that this is a form of feudalism, digital feudalism. And you can think of the platforms as an oligarchy because it’s not just about oligopoly.

It’s not just like financial control. It’s little control over our lives. This is our information system, whether we like it or not.

The Internet is the means by which we as a society process information and make decisions about things. And these systems are designed to keep us on the platforms engaged because that’s how you monetize it, through advertising and various other means. Right.

So, that is why, I would argue, or we argue, we are at 48% versus 48%. On today, the very day we’re having this interview, the probably, arguably, most important election in history, the whole country is divided. It is an outcome of these algorithms to create this division, to create these engagements.

All of that’s a pretty ugly, dystopian state of affairs. Our point then is, and this is in the penultimate chapter of the book, is like, okay, look forward. What’s happening? AI.

Take that model and put it into AI, and it’s taking all of that harmful impact of abuses of our data and ourselves. Our data is ourself. This is your personal being in the digital age.

And it is pushing it into overdrive on steroids, whatever metaphor you want, in a world in which it’s just being replicated. We do not want those systems to be owned by Microsoft at OpenAI, Google, whomever. There’s got to be a much more decentralized ownership of the data inputs, of the models, of the systems, than what we have had in Web 2. It’s just, to me, so plainly obvious.

And I don’t know why. The book is all about trying to get people to basically wake up a little bit. Are you familiar with Mike Pondsmith’s work on cyberpunk? I am, yeah.

So you’ve got this world of all of these different types of internet systems that essentially emerged because of corporate controls or geographical things. We already have that to some extent. We have it with X right now.

We have it in the Chinese with the great firewall in China and so forth. So this thought of a decentralized internet, it seems like we’re getting further and further away from that right now. No, I think we are, and that is a problem.

At some point, and you’re alluding to some of the physical constraints that we have that I think are different from the corporate structure, and that will always, maybe it won’t always be there. Maybe Starlink or some competitor to Starlink becomes something, maybe there’s a, if you start to think about what public blockchains are or tokenized models, they are collective ownership. And I think that’s one of the most important things that we can bring to bear in this.

And so the idea that we would have a future in which, this agentic future that we’re talking about, where everybody owns their own agents. AI, yes. Right.

But how is that going to work in a centralized internet, where every single prompt is being pushed through one single pipe? You’re never going to have the bandwidth to do it. So you’re going to have to build edge compute. Well, edge compute itself may not be decentralized because one company might own all of the chips or own all the devices that run that.

However, you can start to imagine a world in which it could be far more decentralized, where all the computation is happening in these localized environments. And as the token holders, I own that and I pay for the services I’m getting with those tokens that I earn for providing the compute, providing the connectivity, et cetera, et cetera. And so there’s a world in which, I mean, you can see how it would emerge, that you could actually break down a lot of these silos and start to create something more collective, more decentralized and distributed.

You know, you’re still going to have nation states with the guns in their hands. You know, it’s hard. But look, I’m having a conversation on Thursday with Hernando de Soto, the brilliant Peruvian economist that I’ve known for many years at the Propy Summit.

And he’s going to talk about how establishing digital, using blockchain models for property rights, and we would have become really sophisticated on that. We could build these models of empowering human beings that make it very hard for nation states to actually come in and use their weapons to take control. So look, it’s a very utopian way of thinking.

But at the same time, you know, innovation happens. You know, necessity is the mother of invention, right? And so if we’re all going to end up in Skynet, then there is a necessity to do something. I figure we can do that.

Otherwise, we’re extinct, you know? So come on. Yes, yes, absolutely. You know, we talk about the, you know, I mean, but the same is true of capitalism in many ways, right? Unless we progress off and create new value systems, then we’re going to extinct ourselves as well.

But listen, I want to take a quick break. You’re listening to Breaking Banks. We’ll be right back after this break.

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2024 marks the 20th anniversary of the Financial Health Network and of the financial health movement as a whole. Over these last few months, we’ve reflected on our last two decades, the successes, the headwinds and tailwinds that lie ahead, and the work that remains to be done. In June, we brought our network together at our annual conference, Emerge.

And for me, one of the highlights was honoring the next recipient of the Financial Health Visionary Award. We created this award in 2018 to recognize leaders who are really doing financial health, who are building a more accessible and inclusive financial system and empowering the next generation of leaders to improve financial health for all. This year’s recipient was Bank of America Chair and CEO, Brian Moynihan.

I had the opportunity to sit down with Brian at Emerge and talk to him about his vision and why he is so supportive of financial health as a business strategy. And so without further ado, take a listen to my conversation with Brian Moynihan prerecorded at Emerge. This is my eighth Emerge.

And recently, our team asked me what my most memorable moment of the conference has been. And without a doubt, it was in 2018 when we awarded Dan Schulman, CEO of PayPal at the time, with our inaugural Financial Health Visionary Award. Today may surpass that.

Here to introduce our visionary award session is Jennifer Tescher. Hello again, everybody. Good afternoon.

The Financial Health Visionary Award recognizes individuals who have shown unparalleled leadership in building a more accessible and inclusive financial system and empowering the next generation of leaders to build innovative solutions that improve financial health for all. As you just heard from Brenton, we created the award in 2018 to recognize then PayPal CEO Dan Schulman’s pioneering commitment to financial health. He was kind of our financial health poster child for a while.

In 2021, we presented the award to Queen Maxima of the Netherlands, the United Nations Secretary General’s Special Advocate for Financial Inclusion, for her work in advancing the mission and vision of financial health on a global scale. This year, I’m honored to present the award to Brian Moynihan, the Chair and CEO of Bank of America. So my relationship with Bank of America began in 2007 when I was invited to join its National Consumer Advisory Council.

And so I had a front-row seat to the tumult of the financial crisis and its impact on both consumers and also the bank. Bank of America’s stock dipped as low as $2.07 a share in 2019. And in 2010, which was Brian’s first year as CEO, single-family mortgage delinquencies across all banks peaked at nearly 11.5%. Contrast that with today.

Bank of America stock trades around $40 a share. Net charge-offs are down 50%. And customer satisfaction has improved by double digits.

Now, while these results are impressive, what’s more impressive and why Brian is up here today is how they were achieved. As Brian considered how to turn things around in the wake of the crisis and the Great Recession, he was guided by the belief that the bank’s long-term success required leaders to consider how the firm’s decisions would impact the financial lives of its customers. And so under his leadership, the bank committed to a new purpose, help make financial lives better through the power of every connection.

Now, every bank, every company has a purpose statement. And for some, it’s just a fancy poster on the wall. But this really became the North Star for a larger enterprise shift.

And by 2014, the bank had adopted the phrase responsible growth to describe its strategy, which included four principles. Grow and win in the market, no excuses. Grow with a customer-focused strategy.

Grow within Bank of America’s risk framework. And grow in a sustainable manner. Ten years later, I am told that Brian still starts every internal meeting repeating that mantra.

From there, the bank created a fully integrated customer feedback program and a customer care team, flipping its definition of performance to focus on customer-centric measures like satisfaction and attrition rates rather than focusing primarily on the performance of individual products. The bank also streamlined its consumer business by offering a core set of transparent and affordable products and services, including a no overdraft solution, Safe Balance, which we were really pleased to help the bank develop, and which today represents more than half of all the new accounts opened. They also created, more recently, Life Plan, a digital tool that allows customers to set and track both short- and long-term goals.

One-third of the bank’s branches are in low- and moderate-income neighborhoods, and bank leaders also invested in those branches, driving organic growth and dramatically increasing the satisfaction of both customers and employees in those branches. Speaking of employees, the bank has made a significant commitment to the financial health of its 200,000-plus workers. The bank is on record that it’s increasing the minimum hourly wage to $25 by 2025.

It now offers most of its employees stock grants. Those earning lower wages pay less for health insurance. And these are just a few of many leading practices.

We recently published a case study detailing the bank’s decade-long financial health journey, driven by Brian’s fundamental belief in the importance of centering the needs of customers and workers alongside investors. And you can check it out for yourself. It’s available on the Emerge app.

Unlike some corporate CEOs, Brian isn’t flashy. He doesn’t seek the limelight. He simply lives his values and does what he thinks is right every single day.

I first witnessed this quality within his first three months in the top job. Regulators had set new rules requiring banks to get permission from customers to provide overdraft services on debit card purchases, and many banks had launched campaigns to convince their customers to opt in. Brian, however, decided that the bank would stop enabling and charging for debit overdrafts altogether.

No other major banks followed his lead. And at the time, debit purchases accounted for about 60% of all of the bank’s overdrafts. Brian was unwavering, and the bank has continued to lead the industry on reining in overdraft practices.

Just two years ago, it reduced its overdraft fee from $35 down to $10, and over the last 15 years, overdraft revenue at the firm is down 90%. You won’t hear Brian say the words financial health very often, but time and time again, we have seen him do financial health, embracing it as an approach to achieving responsible growth that drives bottom-line benefit. I can’t think of anyone more deserving of the Financial Health Visionary Award, so help me congratulate him once again.

Thank you for being here. My pleasure. Thank you for honoring me, and importantly, the 200,000-plus people who do all the work in the company that I just get to take credit for at nice events like this.

They are a great team. It’s a tremendous team. I want to take you back to 2010.

The nation was emerging from the financial crisis and from the Great Recession, and you became the chair. What was going through your mind as you were devising this new purpose and ultimately the responsible growth approach? Well, I think you have to go just back to the decade before only to think that if you went from 2000 to 2010, what happened in the Bank of America is it became coast-to-coast. National Consumer Brand had gone through, obviously, a financial crisis, had bought MB&A into credit card business and become a major player there, had bought Countrywide in the mortgage business, had about, I think it started the decade probably with 100,000 people, ended the decade with 300,000 people, to give you a sense.

So it just had grown. And so when we came in, what I was faced with was something different and the management team was faced with that anybody in the history of any of the companies that come together is we were done buying. We couldn’t buy, and we just had to focus on organically driving the company.

And that then said, as the biggest consumer brand, going through a bit of a mess with the mortgage issues and things like that, we had to sit there and say, we have to run this company in a way that our brand can withstand anything and go forward. And we actually started on some of the stuff in 2007 and 2008, and it carried through. And the team has carried it through, Holly and Aaron and Dean and Tong and all the people over time.

But basically we said, look, we’re going to provide the fairest set of products and we’re going to do it in a way that the numbers of accounts we sell come way down, but the retention rate of those customers come way up. That were the primary customer account. Therefore you have the economics to make the changes that give up 90% of the overdrafts and things like that.

And it’s all worked. I mean, the digitization was important because everybody has a phone now. If you go back 2010, it wasn’t as prevalent.

The iPhone just had come out in 2007. And we were the first app available on it. So we knew it was working.

It was already off, but you didn’t have the broad earning population, the broad working population, the broad population having it. And so all that enabled activities that allowed us to bring down the cost structure. And so we have to have the balance.

You have to have profits and purpose. That’s what responsible growth actually articulates. You have to be customer centric, think of the customer in.

But part of it came by that was a strategy that we knew would end up with a brand that was, as you said, at a record high now, the customer satisfaction record high now, the turnover rate among customers and teammates lowest it’s ever been. Those are important things that generate the economics that pay for all the changes we made in fee structures and account structures and no fee accounts and $500 minimum, low balance, the small loans. All the things we did were basically funded by that ability to settle the place down, but against that basic principle.

So what you just described is a long game. Wall Street doesn’t make it easy to play the long game, and particularly where things were in 2010. I mean, maybe that gave you more room because you couldn’t go much lower.

But how do you think about that? How do you do the long term while keeping Wall Street happy? How do you play the long game? The answer is you have to play the long game. And faced with what we had, we had to play it even more than most because we couldn’t make acquisition. There was no ability to repeat the past.

And so we had to play the long game. And the long game is easier to play. Now, we had a mess, and so people weren’t expecting a lot out of us, frankly.

And so that gave us some air cover, but that was a lot of work. I mean, to go through what we had to go through in the mortgage business, you think of all the modifications we took. We ran customer fairs all over the country along with various groups to try to do it.

But it gave us a little bit of air cover. But remember that you and your colleagues, that we talk at NCAC, which is a very valuable company, we always are trying to make sure we all are 20-20, as we say, on the idea of the effectiveness and efficiency of the company is what fuels our ability to do this. And so when you’re thinking about our company, we always had to make the tradeoff.

We knew we had to bring the branch count down because people weren’t using it the same. It wasn’t because the customer demand wasn’t there, but that funded the other thing. So when somebody would raise, well, you close branch X or branch Y, I said, well, if we don’t close that, we can’t do the overdraft thing.

We don’t do this. So it all had to work together. That gives you a license in the long game.

And I think at the end of the day, it’s worked. The consumer business of Bank of America grows faster than anybody else and has better economics than anybody else all because it has, I think, the fairest set of products than anybody else and provides more financial health, I said it, than everybody else. And I think that’s based on that.

But we did get some air cover from the crisis to be able to spend some money, do some things faster. But I think you can still do it. From 14 to now, we’ve done a lot, and there was no air cover.

We were earning the whole time. Yeah. There have been so many things that you’ve done along this journey.

I detailed only a few of them. And, you know, you’re starting to be recognized for it. You’ve now been certified by J.D. Power three years in a row for financial health and advice of your customers.

And this isn’t just, you know, J.D. Power analyzing. This is what your customers are actually saying about you and how they perceive the business they do with you. Particularly in the last few years, what are you most excited about? What do you feel most proud of? Well, I think we listen to the customers, including the e-mail that you Google is my e-mail.

They all come to me. Nobody else reads them. So every customer can reach out.

And Holly’s the same way, and Aaron’s the same way, and their colleagues are the same way. So in all our market presence and all our markets, their e-mails, we want the information to come. So we listen to customers.

We serve that customer efficiently. What gets me excited is I see from the consumer’s ability the constant connection with them allows us to work with them even more. So to be able to see in the mobile platform their balances, where they stand, their budgeting, what the expense is versus revenue versus expense, which at the end of the day one of the principles that you advocate heavily is cash flow.

How do we measure cash flow? And I think our app lets you see that. So you can see that in the app. Those are exciting things.

And so life plans so people can plan out and engage with it. And it all goes at the pace of the customer. Now, behind that there’s lots of interesting things that people could go on and on about.

But the basic principle is that you always have your bank in your pocket. You can always engage with it about where you stand financially. And you can always use it to increase the safety and security of your life.

And then we can help people get homes from homeownership projects. We can help people save more money by not having the fees. That all plays out.

But that constant connectivity is exciting because it’s a way to share information back to people that will help them live their lives even better. And that’s the value. But that wasn’t possible 15 years ago.

It is possible now. So we talked about the challenges of taking a longer view, but also how you do it and why it’s necessary. But we work with lots of banks and lots of other companies.

And I continue to come back to the fact that the key differentiator is who’s at the top and what their priorities are and ultimately what their values are. And my sense is that this speaks to your values. And I wonder if you could tell us more a little bit about what those are and what shaped those for you.

I think without getting too philosophical about it, I went to law school. And I went to law school at Notre Dame where we were trained in a Judeo-Christian sort of tradition, which was treat people like you ought to be treated. We had a professor.

We were going through a jurisprudence class. And it’s all these crazy cases, Supreme Court cases and all this stuff. And we’re all thinking so intellectually about it.

He said, this is pretty simple. Treat people the way you want to be treated. And that you can do any Supreme Court case in the court if you look at that around civil rights and all this stuff.

And he said, that’s a pretty interesting way to think about it. So we’ve always taken a position that those are our customers. Those are our teammates.

Those are the families of our teammates. Therefore, treat them with a respect, a dignity, and a capability that we’d want to be treated as customers. And we’re all customers.

And think about that. And I think that is where I personally come from. But that’s not unique.

It’s just that we then figure out, the team figures out how to not apply my personal viewpoints, but our company viewpoints about that principle. Sure. Let’s widen the aperture for just a minute.

I mean, you’re the CEO of a major financial institution. And I’m sure people want to hear from you. What are the issues that you’re most focused on, besides financial health, of course, that’s going to create headwinds and tailwinds for customers? Well, at the end of the day, the pandemic did so many things.

But one thing, it put a lot of money into our customers’ pockets, which they have managed to retain a fair amount of that. Unemployment’s low, which is very good. So what you worry about, at the end of the day, whenever you talk about all the different things that go wrong, the way it’s going to affect us as a company and our customers is going to be through higher unemployment, lower consumer spending, businesses getting in trouble, small businesses failing.

And we don’t see that as a matter of economy. But that’s what we always worry about. And that’s why, when we structure the portfolios of products and services, we structure to be able to stay in economic recession.

But that’s what you worry about. You worry about, at the end of the day, if the consumer in America continues to be employed and continues to spend rationally, and sometimes they spend irrationally, and continues to be able to deal with inflation, which it’s leveling out a little bit. We’ll see it play down.

Then there’s not a lot for America to worry about. But the opposite is actually true. So we can worry about Ukraine.

We can worry about the Middle East. We can worry about China. But what we really have to worry about is what causes companies to not employ as many people and what causes consumers not to spend so those companies have something to sell.

It’s a fairly simple equation. All right. I’d love to hear you make the case.

This is a room of true believers for why we all have a responsibility to improve the financial health of our customers, our employees, and our communities. So I think it’s pretty simple. When people ask why we do what we do with our customers, our communities, our teammates, and our shareholders, as financial services companies, you really have one thing you do, which is transmit the economy from your customers to the market, the market back, the market, not meaning the stock market, but the commercial market.

That’s what we do. And so we are in the flow to help them live their lives financially. And so we should never forget.

And so if you start with that focus, that’s our core role. And then visualize our company, the oldest part, is 240 years old. And I always visualize a bunch of people sitting around saying our community needs a bank to be successful.

And they started a bank. And that bank is number two charter at the OCC. And it’s been around for all these elections, except for the first presidential election, it’s been there for every one of them, no matter what happened.

It’s been around. But you visualize that. Now, that happened in thousands and thousands of villages and towns around the US.

A bunch of those are involved in our company and other companies. And some of them have histories like that here. But they started because the community had to be strong.

And I think that’s what we could always have to remember. If the community’s not strong, we’re not strong. The community has to be strong not only in economic strength, but in arts strength, because that’s a part of a community strength.

The great quote by Winston Churchill was when somebody said, why are you funding the arts in the middle of World War II? And what he said was, well, if we’re not going to fund the arts, what are we fighting for? And so that principle of a strong community from arts basis, from employment basis, from education basis, from financial services provision basis is the key. And that’s what a bank does. And so you don’t need to make it more complex than that.

Please help me thank Brian Moynihan. That’s it for another week of the world’s number one fintech podcast and radio show, Breaking Banks. This episode was produced by our US-based production team, including producer Lisbeth Severance, audio engineer Kevin Hirsham, with social media support from Sylvie Johnson.

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