It’s earnings season again. Listening in on the calls for Citi, JPMorgan, and Wells Fargo, The Stack heard notes of real caution about the macro situation, regulatory pressures (Basel III) – and a big ongoing focus on digital and data transformation as well as broader automation.
As Citi’s CEO Jane Fraser put it (with the bank confirming tech spend of $3 billion in Q3): “Transformation remains our No. 1 priority.
“We're deep into the large body of work of automating manual controls and processes, consolidating fragmented tech platforms and upgrading our data architecture,” she told analysts on the call.
Wells Fargo CEO Charlie Scharf emphasised the “continuous, ongoing effort” to improve the bank’s risk and control framework” amid regulatory pressure and also drew attention to ongoing digital enhancements at the front-end, for example across mobile apps.
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He singled out the expansion of “LifeSync” – the bank’s digital personal advisor, launched in February 2023, which offers “real-time progress on goals, tracks key “vitals” — including net worth, portfolio performance, market indices, FICO scores, and credit card reward balances.”
He also pointed to efforts to make Fargo, its AI-powered virtual assistant, able to work in Spanish, as the bank pushes for more mobile adoption – adding over 520,000 mobile active users in Q3.
Yet all banks’ leaders warned over the economic outlook and were taking a conservative approach to managing it – Wells Fargo’s CFO emphasising “additional opportunities to reduce headcount… which will likely result in additional severance expense for actions in 2024.”
“I would say there are very few parts of the company that we would say are optimized at this point” Scharf told analysts on the call.
JPMorgan came under some pressure from elevated digital transformation spending, with one analyst on the call asking “does it really help to be the biggest tech spender of the banking industry?” (Overall quarterly expenses across the bank were $21.8 billion; attributed to an "increase in headcount, continued investments in technology and marketing...")
CFO Jeremy Barnum responded quizzically: “I just think it's mandatory. I mean, we're a big and very technology-centric business, and the world is competitive. Everything is changing. Younger generations have different expectations, and we have to be nimble, and we have to be on our front foot. Otherwise, we risk getting severely disrupted."