Responsible Growth in a Time of Volatility

Context

A champion of inclusive growth, Brian Moynihan was instrumental in helping Bank of America weather the COVID crisis. In Q4 2020, the US bank – much like the wider financial industry – saw revenue decrease 10% and profit 28% year on year. With the pandemic causing entire industries to falter, more companies were defaulting on their loans, and this affected Bank of America’s credit quality.

Moynihan’s turnaround strategy, however, was measured and surefooted. The CEO often preferred stability over risk. Yet, his emphasis on ethical and responsible banking practices saved Bank of America from what would have been a financial disaster during the pandemic.

What makes Brian Moynihan a remarkable WarTime CEO?

Real-Life Story

Moynihan often used the concept of scrum from the sport of rugby to describe the process of developing a new strategy, a new gameplay, in the aftermath of a bad decision on the field. 

A scrum refers to eight people getting ready to kickstart a play, “locking up their arms together and moving together in absolute coordination,” he said. It’s an appropriate metaphor for how Moynihan – a college rugby champion – values teamwork in the corporate world, especially when faced with a crisis.

Arne Sorenson, the late CEO of Marriott International, once commended Moynihan’s ability to drive team spirit as one of his greatest strengths. 

It was no surprise then that, when the COVID pandemic struck, Moynihan’s first move was to ensure all his team members – numbering more than 200,000 worldwide – moved as one and rallied behind a common goal. 

One factor behind Bank of America successfully steering through the crisis was its approach to stakeholder management, whether towards employees or clients.

Aside from shifting 95% of staff members to remote work, Bank of America expanded the range of financial incentives and other special benefits for employees who had no choice but to report to work onsite – from branch offices to call centres. This signalled to staff that their work was valued. 

The economic downturn of 2020 also led to an increase in the demand for financial assistance. Moynihan and his team recalibrated the company’s Client Assistance Program. 

Clients were given the leeway to defer payments on mortgages, credit cards, and car loans for 60 to 90 days without negative credit reporting. Meanwhile, the bank waived overdraft fees, non-sufficient funds fees, and early withdrawal penalties. 

Moynihan’s two most remarkable accomplishments during the crisis came from partnering with corporations to raise US$461bn in capital for clients – an initiative that generated record fees for the company’s investment banking division – and facilitating the US government’s stimulus program.

Bank of America processed over 330,000 Paycheck Protection Program (PPP) loans and provided small businesses with $25bn in capital.

Under Moynihan’s leadership, the bank also allocated $100m in relief to communities struggling with access to health care and food supplies.

PostScript: Moynihan’s leadership during the pandemic wasn’t so much about Bank of America looking inward and obsessing over its own growth numbers. Instead, it was about looking outward and understanding the impact of the crisis on the wider world.

Moynihan was vital to ensuring Bank of America continued to lend a hand to businesses and individuals fighting to survive. In 2020, when other leaders crumbled in the face of volatility and uncertainty, Moynihan was recognised as CEO of the Year and emerged as one of the US banking industry’s most resilient leaders.

Key Lessons

1) Ethical leadership over short-term goals

In times of crisis, a greater focus on ethical practices and responsible growth can safeguard companies against long-term damage. Moynihan’s commitment to ethical banking prevented Bank of America from suffering a financial disaster, proving that integrity can be a powerful stabiliser.

2) Unity and team spirit 

Just as Moynihan employed the rugby scrum as a metaphor, CEOs should rally their teams to move in unison towards a common goal. In a crisis, the collective strength and coordination of your team can be a great asset.

3) Empathy and care for stakeholders 

Demonstrating empathy and understanding for both employees and clients is crucial in turbulent times. Moynihan’s adjustments to employee benefits and client assistance programmes showed that valuing people leads to loyalty and resilience.

4) Swift crisis response and business continuity 

Moynihan’s recalibration of client support programmes and strategic partnerships exemplified the need for swift adaptation and innovation during a crisis. Wartime CEOs must be agile, ready to pivot strategies to meet new challenges and opportunities head-on.

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Until next week, may the force be with you.

Kevin

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