Interview With BofA’s Catherine Bessant From CNBC’s @Work Summit

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Interview With BofA’s Catherine Bessant From CNBC’s @Work Summit
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Following is the unofficial transcript of a CNBC interview with Bank of America Corp (NYSE:BAC) Vice Chair of Global Strategy Catherine Bessant at CNBC’s @Work Summit, which took place today, Wednesday, October 13th. Video from the interview will be available at https://www.cnbc.com/work/.

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Interview With Catherine Bessant

CARL QUINTANILLA: We are here with Cathy Bessant, Vice Chair of Global Strategy at Bank of America. Cathy, what a treat for us. Thank you so much for the time.

CATHERINE BESSANT: Thanks for having me, Carl.

QUINTANILLA: I'd love to start the conversation just by starting how we start a lot of these conversations and that is asking you to take us back to March of 2020 when it became more evident what the challenges ahead were going to be like and sort of the process you went through in establishing what the priorities were, what your goals were going to be as you knew we were going to be headed into a difficult time?

BESSANT: Well, I think everyone had a moment of can this really be happening and as a leader when you start from the moment of this can this really be happening and what you're facing is not a technical crisis or an economic crisis, you're facing a human health and safety crisis. We really approached it this way first clarity of purpose, you know, safety of our people first, equipping our people to work remotely which was no easy feat, equipping them to work remotely, and then hard core precise focus on performance for customers and clients every day. I think the second thing in all of that is role clarity. We learned very quickly. We had to determine who was calling the shots, who was making what decisions where was the 51% ownership when we had moments of judgment and there were a lot of moments of judgment. We were all in uncharted territories. I also learned a couple of other things. Sources of information are really important. You've got to have people around you in a crisis mode and especially this crisis that will tell you what you don't want to hear and that have the facts and data that enable you to make calls and judgments at all times. Another really important thing that that almost surprised me, I hate to admit that I was surprised, but the role of third parties is really important for every company. It's not just the company itself, it's the ecosystem and the performance of our third parties was widely variant and we had to learn quickly to figure out who we could count on, who we couldn't and what we were going to do in the middle.

QUINTANILLA: That's interesting. I wonder, given everything you just said, are there a couple examples of very short-term near-term objectives or goals that that got accomplished and others that just slipped through the cracks?

BESSANT: Well, I kind of go back to it takes clarity of focus. So, in the supply chain, the delivery of the technical tools people needed, we needed to cause different behavior and behavior that was sometimes outside of the contractual environment. It taught us a lot about understanding the character and the motivation of our, of our third parties and, and it will ever, forever change the way that we make decisions about what we buy or what we build and what we, where we use third parties and how we work with them and rely on them.

QUINTANILLA: Because meaning you stick with suppliers that came through for you then or entire areas where you realize you couldn't rely on anyone outside of the house.

BESSANT: We made some decisions to bring some things in house because we needed to control our ability to execute the way we wanted to differently. There are some suppliers where we will double down because their performance went above and beyond. You remember it was an environment where we were all figuring things out real time and that, that understanding of the strategic alignment of third parties will make a very big difference into where we double down and where we come in house.

QUINTANILLA: One thing that astounded me was and correct me if I've got this wrong, BofA recorded the most patents granted in any first half of any year in the company's history in 2020. Can you talk about how that happened and whether or not that was the result of just all kinds of things getting pulled forward in the early days of the pandemic?

BESSANT: I believe it's due 100% to the resiliency of our people and their unfailing attitude that no matter what it took, they were going to perform for clients and customers, take care of each other, but continue the work of the future. You know, that's the culture of great technology and operating people to see a problem or see an opportunity and make something more out of it. I think it would have been fine if we had stayed with the status quo, but our teams simply wouldn't do that. They said we can do more. We can do better. We can emerge with more innovation out of a crisis and we're going to do that so I attribute it 100% to high quality talent.

QUINTANILLA: Interesting. I wonder if, as of today, you think of technology as an in person sweet spot or a remote sweet spot or some kind of or maybe it's just agnostic. How do you think of it right now?

BESSANT: I believe we have to start to think of technology as enablement for all things that might happen. Even when we bring people back to the office, the, the number of people who attach to our network who continue to use the tools that we gave them when we were working remote taxes every element of our infrastructure so, you know, making adjustments to make sure that no matter if we're in office, if we're out of the office, if others in the ecosystem have a different way of working that we not only have all the tools we need but that our people know how to use them and that is a much bigger challenge than, than most people would think but the role of technology for the firm is as a path to customers and clients. We don't love it for its own beauty. We love it for it, for what it does to our marketplace, what it does for the financial system and what it does for customers and clients. So, so that's really the perspective.

QUINTANILLA: Right. We've talked to a lot of corporate leaders about innovation and how remote work alters the pace of innovation. Andy Jassy of Amazon for example told us earlier in the year that he thought innovation was really a process that that happens after the in-person meeting. You break off, you're going down the hallway, you wind up in a conversation over a cup of coffee or at a whiteboard and that's where true innovation happens. That's why they're trying to lead return to the office so aggressively. I wonder where you come down on that.

BESSANT: We are definitely a company that has worked from office culture. The reason for that is that informal collaboration that you're talking about we believe produces a better and more sustainable outcome. You know, our people after 18 months are fatigued and they performed brilliantly, but, but I think I as a leader question the sustainability of innovation, the sustainability of engagement and culture building in a perpetual remote office or remote environment and that's why we're very focused on getting our people back to the office.

QUINTANILLA: Can you talk a bit about how your, how you plan in general right now given that and I'm guessing you like many people feel maybe visibility's been shortened, that runway is not quite as long in the field of view. How does that affect planning right now?

BESSANT: Well, I start from the perspective that if the pandemic hasn't taught us anything, it needs to have taught us that that our way of working that emphasizes highest probability of risk has to be thrown out the window. The concept can't be what's the lowest probability of risk and we won't focus on that. The focus has to be on what if the worst happens. Not will it, but what if it does. And so I think that's a big shift in the leadership paradigm and requires us all to think, think very differently as we approach every element of our tools, whether it's how we train and develop and promote and attract our people or how we think about technology.

QUINTANILLA: Does that mean that as a leader, you're in a more defensive crouch because you have to prepare for potential black swans or does it affect your ability to be aggressive or proactive in any way?

BESSANT: I think that it enhances our ability to be proactive and aggressive. We know as do most firms that there are things we wish we had done more aggressively to be prepared. And so the glide path now is to ensure that we do those things and that takes a very aggressive, assertive forward looking approach using technology and architecture in ways that we've never used it before so that, you know, we're always up no matter the scenario that we can transact and do the things that are important to our customers no matter the scenario and that you cannot be back footed in that kind of a discussion. It requires being front foot and I think our people and I know certainly as a leader, I'm ready to be front foot.

QUINTANILLA: Anyone who covers or has covered banking for many years, it's incredible how far we've come from the days where banks were measured on branches and hours opened at a branch. I wonder what kinds of opportunities in technology specifically you're most excited about and sort of what the modern bank is going to look like in five to 10 years?

BESSANT: Well, I think this does not as you did 20 years ago when everyone told me there would be the demise of the branch or the demise of the financial center, I actually think technology has the power to enhance opportunities for our brick and mortar and our client facing people to be more important and more relevant in client decision making and client opportunity. We think of it as high tech, high touch and automation of mundane tool, of tasks to free up people to use their intellectual capital and their creativity and at the end of the day, clients think hitting send is okay, what they really want is advice and counsel and perspective that they can't get any other way than by working with high quality professionals.

QUINTANILLA: Is that, is that because the customer base is seeing generational change or do you think that applies to even old fogies like me who were used to banking in a prior era?

BESSANT: I think it applies to everyone and we have seen rapid adoption of that combination of high tech and high touch, even in the, in the segments that people don't expect. I got a question in a meeting yesterday, what about, what about older people? I probably fall into that category, but what about older people who probably don't like technology. The answer is they've been adopting and demanding technology almost more so than other, other segments that we've got so utilization and adoption has been uniform across all segments. It's been, been I think really validating of the strategy that we've had all along and in fact you can teach an old dog like me new tricks.

QUINTANILLA: Your, your former title was Chief Operations and Technology Officer. You're now Vice Chair of Global Strategy which I think is instructive in how Bank of America is thinking about technology in general. Can you talk about what that path, your path says about technology and the role that's, in which it's going to be integrated?

BESSANT: Well, I do think and I don't like the concept of the world is flat to tech, due to technology. I believe the world has been made smaller and more independent. We've learned about the problems with focusing on, on a country by country basis and the importance of thinking globally. And there's no question that the pace of change and the opportunities for our firm and for other firms to acknowledge that we're truly global and then to create a vice chair role and house it in, in Europe is, is a real manifestation of everything that we've learned. It's also a manifestation of how important public policy and technical regulation is globally. Nothing that happens in one country doesn't affect many others and so putting, putting a vice chair in the thick of that to take everything we've learned, to take everything we've done under Brian's leadership over the past 12 years and to really make sure that we're thinking about that in a global way. I'm, I'm really looking forward to taking everything that's, that's gone before me and my career and applying it to making sure we've got a forward foot strategy and that we're applying those learnings from the heart of Europe and around the world.

QUINTANILLA: Finally, I know it can often sound a little glib to ask your advice to other corporate leaders in businesses big or small, but you've been so specific in this particular chat. I mean what, what in a nutshell do you recommend to those managers who are finding themselves in uncharted waters whether it's related to the pandemic or anything else in the coming years?

BESSANT: Well first I don't believe there's any return to pre pandemic, pandemic leadership. Leadership and management are forever changed. Our people that were leading and managing have forever changed. Empathy is no longer a soft skill, the ability to see things through other's eyes, even when you can't see them right in front of you at a desk or at a table, that ability to combine technical leadership with empathy will set leaders apart in the future. I mentioned the topic of tail risk and how we as leaders prioritize the works, the work of our teams really has to have to change dramatically. I'd also have two other pieces of advice, get rid of the concept of front, middle and back office. It is an integrated end to end process that has to be excellent in order to serve both in the times that are good but in the times of pandemic. One more which is let's as leaders give up fighting the scenario. We can't fight the fact that the world has changed. We can't fight the fact that, that we all of a sudden went remote on a global basis. We can't wish it hadn't happened or spend our time in that surreal experience. We have got to absolutely got to accept the scenario and, and move past that acceptance almost immediately. We don't have the time to, to, to not do that anymore.

QUINTANILLA: It's just stellar insight and we're so appreciative to you, Cathy. Thank you so much for your time. Great chat.

BESSANT: Thanks Carl. Great to be with you.

QUINTANILLA: Cathy Bessant.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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