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WHEN: Today, Friday, October 7th
WHERE: CNBC's "Squawk Alley"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Brian Moynihan, Bank of America CEO, and Jim Cramer on CNBC's "Squawk Alley" (M-F, 11AM-12PM ET) today, Friday, October 7th. Following are links to the video on CNBC.com: http://video.cnbc.com/gallery/?video=3000557609 and http://video.cnbc.com/gallery/?video=3000557610.
All references must be sourced to CNBC.
JIM CRAMER: I HAVE BRIAN MOYNIHAN WHO RUNS BANK OF AMERICA. WE ARE INDEED OUT IN SQUAWK ALLEY. WE ARE TALKING TECHNOLOGY AND I HAVE WATCHED YOUR BANK EVOLVE FROM THE COMPANY THAT WAS PRETTY MUCH LIKE ALL THE BANKS TO ONE THAT HAS – UNDERSTANDS A MOBILE STRATEGY AND UNDERSTANDS WHO THEIR CUSTOMERS REALLY ARE. I JUST WANT TO TALK ABOUT HOW MAYBE THIS IS THE TIME WHERE SOME BANKS BREAK-AWAY FROM OTHER BANKS BECAUSE OF TECHNOLOGICAL ADVANTAGES.
BRIAN MOYNIHAN: JIM, THIS IS THE TIME. BUT BEFORE I DO THAT, LOOK HOW BEAUTIFUL IT IS OUT THERE. AND I WANT TO GIVE A SHOUTOUT TO OUR TEAMMATES IN FLORIDA AND THE CAROLINA COAST.
MOYNIHAN: THEY ARE GOING THROUGH A TOUGH TIME. SO WE ARE DOING OUR BEST TO PROTECT THEM. BUT THINK ABOUT IT. WE HAVE BEEN AFTER, YOU KNOW, ONLINE BANKING, MOBILE BANKING FOR DECADES NOW. ATM USAGE AND EVERYTHING. IT'S A CHANCE TO REALLY HAVE THAT INTIMATE, ALWAYS-ON RELATIONSHIP WITH YOUR CLIENT THAT WAS NOT AVAILABLE THROUGH BRICKS AND MORTAR. YOU HAD TO WAIT UNTIL SOMEBODY WALKED IN. YOU HAD TO WAIT UNTIL THEY CALLED YOU. NOW YOU CAN BE TALKING TO THEM ALL THE TIME, IN A GREAT CONTEXT OR CONVERSING WITH THEM. AND THAT ALLOWS YOU TO DO THINGS WE'VE NEVER BEEN ABLE TO DO.
CRAMER: NOW, I THINK IT'S ALSO IMPORTANT TO BE EMPIRICAL ABOUT IT. THE NUMBERS OF GROWTH THAT YOU HAVE FROM YOUR MOBILE, WHICH MANY OF THE OUTSIDE PEOPLE AND CONSULTANTS I DEAL WITH SAY IS SUPERIOR – ARE PRETTY BREATH TAKING IN TERMS OF HOW MANY USE IT?
MOYNIHAN: ABOUT 21.5 MILLION. NOW INTERESTING, IN THE THIRD QUARTER, WE GREW BY 1.1 MILLION, WHICH IS ONE OF THE HIGHEST NOMINAL GROWTH RATES IN NEW MOBILE USERS WE'VE HAD GOING BACK A LONG TIME. SO EVEN THOUGH IT'S PRETTY MATURE, WE HAVE 31 MILLION CHECKING ACCOUNTS, WE HAVE 21.5 MILLION MOBILE USERS, SO THINK YOU ARE GETTING TO PENETRATION. WE STILL GREW BY 1.1 MILLION IN THE QUARTER.
CRAMER: SO IS THIS SHARE TAKE FROM OTHERS OR IS THIS PEOPLE WHO ARE JUST BEGINNING TO START BANKING AND MIGHT BANK WITH YOU FOR THE REST OF THEIR LIVES?
MOYNIHAN: WE BUILT A BUSINESS MODEL THAT APPEALS TO MILLENNIALS AND APPEALS TO PEOPLE OUR AGE AND BEYOND. AND SO, WE HAVE A 101-YEAR-OLD PERSON WHO SIGNED UP FOR MOBILE BANKING AND WE PROBABLY GOT A 14-YEAR-OLD KID TODAY DOING IT. AND SO, THE NEAT THING IS THAT DEVICE THAT WAS – DROVE A TRUCK THROUGH THE IDEA THAT I CAN USE IT EASILY AS OPPOSED TO IT'S A COMPUTER AND I HAVE TO BUY A COMPUTER AND ALL THAT, IT'S REALLY BEEN GREAT. SO THAT USAGE WOULD ALWAYS SCORE A LITTLE BIT YOUNGER, BUT IT'S ACTUALLY PRETTY UNIFORM NOW.
CRAMER: ALRIGHT. NOW, OBVIOUSLY, YOU EVOLVED WITH THE STOCK PRICE FOR A SECOND, I'M THINKING ALL BANKS – WE'RE TAUGHT ALL BANKS TREAD TOGETHER. THEY TRADE ON NET INTEREST MARGINS. SO WHATEVER THE FED DOES MAKES IT SO THAT BANK OF AMERICA'S IS GOING TO EARN X, WELLS IS GOING TO EARN X, JPMORGAN, IT DOESN'T MATTER. CAN THIS ACTUALLY MOVE THE NEEDLE? ARE YOU ABLE TO BE ABLE TO TAKE SHARE ENOUGH THAT YOUR EARNINGS ARE GOING TO SURPRISE BASED ON TECH?
MOYNIHAN: YEAH, AND I THINK THERE'S A COUPLE THINGS. SO, OVER THE LAST, SAY, SIX, SEVEN YEARS, WE DOUBLED THE AMOUNT OF CHECKING DEPOSITS WE HAVE, WHICH ARE INTEREST FREE. AND, YOU KNOW, BANKS AND THAT'S WHAT DRIVES THE EARNINGS. AND HOW WE'VE BEEN ABLE TO DO THAT IS BY GREAT CAPABILITIES AND MOBILE AND OTHER THINGS SO PEOPLE DIDN'T HAVE ANY REASON TO GO ANYWHERE ELSE. SO, WE HAVE THE SAME NUMBER OF CUSTOMERS AND TWICE AS MANY DEPOSITS. AND SO IF THE FED RAISES RATES, WE'LL MAKE A LOT MORE MONEY. BUT BY USING MOBILE AND MOVING THE TRANSACTIONS, WE'VE BEEN ABLE TO DRIVE THE COST STRUCTURE DOWN. SO IN THAT SAME TIME PERIOD, WE'VE DRIVEN THE COST BASICALLY IN HALF OF OPERATING THE PLATFORM.
CRAMER: WELL THAT IS IMPORTANT BECAUSE WE'RE OUT IN SAN FRANCISCO. WE KNOW THAT WELLS FARGO, A BANK THAT WE HAVE TREMENDOUS RESPECT FOR ON THE SHOW AND I'VE INTERVIEWED JOHN STUMPF MANY TIMES, ALSO TRIED TO GROW CUSTOMERS. BUT PERHAPS GOT TOO AGGRESSIVE. YOU'RE TRYING TO GROW CUSTOMERS AND GET ACCOUNTS THAT ARE – DIFFERENT WAY. WOULD YOU BE ABLE TO SPOT SOME OF THINGS THAT WELLS WAS DOING? OR IS THAT JUST INDIVIDUAL BANKERS AND DOESN'T MATTER AND THESE BANKS ARE SO BIG THAT YOU COULDN'T EVEN WITH YOUR HAND-HELD AND YOUR TECHNOLOGY SPOT THE KIND OF THINGS THAT APPARENTLY PLAGUED WELLS?
MOYNIHAN: WELL, JIM, MANY YEARS AGO, WE LOOKED AT ALL THE THINGS THAT HAD GONE ON IN THE CRISIS AND ALL THE THOUGHT PROCESS AND SAID, WE HAVE TO DRIVE RESPONSIBLE GROWTH. THREE BASIC ELEMENTS. GOT TO GROW, NO EXCUSES. GOT TO WIN MARKET SHARE BECAUSE THAT IS WHAT OUR SHAREHOLDERS PAY US FOR. GOT TO DO IT THE RIGHT WAY. FOCUSED ON THE CUSTOMERS AND WITHIN OUR RISK PARAMETER AND IT'S GOT TO BE SUSTAINABLE. SO WE BUILT ALL OUR METHODOLOGIES OF INTERFACING WITH CLIENTS TO BUILD DEEP RELATIONSHIPS AROUND FOUR CORE PRODUCTS IN THE CONSUMER AREA. AND WE MONITOR AND TEST THAT. AND SO, THAT'S HOW WE RUN THE BUSINESS. AND SO OUT OF THAT, WE'VE BEEN ABLE TO DRIVE THE MOBILE USAGE FROM BASICALLY OVER THE LAST – PROBABLY 5 MILLION TO 7 MILLION WHEN I BECAME CEO. IT'S NOW 21 MILLION BECAUSE INSTEAD OF TRYING TO SELL AN ADDITIONAL ACCOUNT, WE DRIVE THROUGH THE PENETRATION AND THE DIRECTNESS IN THE CORE ACCOUNT. THAT'S WHAT WE TELL OUR TEAM TO DO. GET THE BASIC CHECKING ACCOUNT FOR MASS MARKET CONSUMER AND DO IT WELL.
CRAMER: WELL, THE BANK INDUSTRY SEEMED TO BE GETTING AWAY FROM THE IDEA OF BEING ON THE FRONT PAGES FOR THEIR NEGATIVES. MUCH MORE ON THE FRONT PAGES FOR JUST PLAYING PART OF THE REBIRTH OF THE ECONOMY. BIT OF A SETBACK, WELLS? OR IS IT JUST AN INDIVIDUAL SITUATION AND REALLY PERTINENT JUST TO WELLS?
MOYNIHAN: LOOK, YOU THINK ABOUT OUR COMPANY AND THINK ABOUT AFTER COUNTRYWIDE. I GOT MY SHARE OF TIME OUT THERE. IT IS IMPORTANT FOR THE BRAND OF OUR INDUSTRY TO KEEP MAKING PROGRESS AND SHOW PEOPLE THAT WE PLAY THIS CORE ROLE, WHICH IS TO HELP THE ECONOMY GROW. HELP DEVELOP COMMUNITIES, HELP COMPANIES BUILD, HELP PEOPLE EMPLOY PEOPLE, HELP CONSUMERS SAVE, BETTER MONEY HABITS, TO LEARN HOW TO USE THEIR MONEY WELL. THAT'S WHAT WE HAVE TO DO. AND ANY NOISE AROUND THE INDUSTRY SETS US BACK FROM THAT. AND WE JUST HAVE TO KEEP PLOWING AHEAD AND SHOWING –
CRAMER: ANY ADVICE TO DEUTSCHE BANK? YOU GUYS CAME THROUGH IT. YOU HAD THE BEST LEGAL COUNSEL OF ANYONE. I KNEW YOUR GENERAL COUNSEL WELL. ADVICE TO SOMEONE ELSE THAT IS KIND OF AT SEA WITH THE JUSTICE DEPARTMENT?
MOYNIHAN: WELL, I THINK IF YOU THINK ABOUT THE AMERICAN BANKS, WE – BECAUSE OF THE IMPATIENCE FROM INVESTORS LIKE YOU, WE ARE FORCED TO GET THE CAPITAL UP VERY EARLY. SO, WE HAD STANDARDS IN 2019. MY ADVICE TO EVERYBODY IS GET TO THE PLACE YOU HAVE TO GO BECAUSE THEN THEY COULD ASK YOU ABOUT HOW YOU ARE GOING TO GET THERE.
CRAMER: DOES IT MATTER – MERRILL LYNCH IMPOSES FEES ON RETIREMENT ACCOUNTS. FRONT PAGE STORY IN THE JOURNAL. WHAT DOES IT MEAN FOR THE AVERAGE CUSTOMER?
MOYNIHAN: WELL, THIS IS THE FIDUCIARY STANDARD BY THE DEPARTMENT OF LABOR. WE BELIEVE THAT THE IDEA OF SAYING WE ARE GOING TO DO WHAT'S IN YOUR BEST INTEREST IS NOT NEW. WE'VE BEEN DOING IT FOR YEARS. SO, BASICALLY WE TOOK THE APPROACH THAT IN THE RETIREMENT ACCOUNTS, WHERE YOU CAN MANAGE MONEY OR YOU CAN MAKE YOUR OWN INVESTMENT DECISIONS. BUT WHAT WE'RE NOT GOING TO DO IS GET INTO A DEBATE ABOUT WHAT WAS IN YOUR BEST INTEREST. THAT IS A SIMPLIFIED MODEL. IT ACTUALLY FEEDS INTO THE BROADER METHOD, WHICH IS THE MASSIVE TRANSFORMATION GOING ON IN WEALTH MANAGEMENT BUSINESS TO ADVICE AND THEN THE PRODUCT COME OUT OF THAT AS OPPOSED TO PRODUCT SELL.
CRAMER: GOT IT. VERY IMPORTANT. THESE ARE VERY BIG DISTINCTIONS. CARL, WANT TO SEND IT BACK TO YOU. THAT'S BANK OF AMERICA CEO BRIAN MOYNIHAN ON THE CHANGING FACE OF THE BANKING LANDSCAPE.
CARL QUINTANILLA: JIM, OUR THANKS TO YOU. GREAT WEEK OF COVERAGE OUT AT 1 MARKET THIS WEEK. DON'T MISS THE REST OF JIM'S INTERVIEW WITH MOYNIHAN TONIGHT, MAD MONEY 6PM ET.
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