Fifth Third Bank saved $15 million in the first quarter, partly driven by deploying automation throughout its operations.
“Expenses are well controlled … driven by savings realized through process automation and our focus on value streams,” Chief Executive Tim Spence said during the bank’s first-quarter earnings today.
The bank reported noninterest expense, which includes tech spend, of $1.3 billion, up 0.8% year over year, according to the bank’s earnings reports.
Fifth Third expects the “tech modernization work that we’re doing” to reduce overhead costs, Spence said.
THE BIG PICTURE: Fifth Third expects growth in technology investment in 2024 by “mid-single digits” to drive operational costs down, he said.
Bryan Preston, executive vice president and chief financial officer, said during the bank’s Q4 2023 earnings call on Jan. 19 that Fifth Third expected to increase its tech spend in 2024 to modernize its platform.
The $213 billion bank’s technology and communication spend dropped 1% YoY to $117 million.
Fifth Third’s peers, including Citi and Goldman Sachs, also reported higher tech spend in Q1 to save on operational costs.
BY THE NUMBERS: In Q1, Fifth Third reported:
- Net interest income of $1.4 billion, down 13% YoY;
- Headcount of 18,657, down 4% YoY; and
- Efficiency ratio of 63.9 compared with 60 in Q1 2023.
NOTEWORTHY: Fifth Third is using ChatGPT to enhance its chatbot capabilities, Chief Information Officer Jude Schramm said on March 18 at Bank Automation Summit U.S. 2024.
“For example, our intent structure around Zelle, if you need help [from the] chatbot, [there are] probably 500 lines of all the different ways people can interrogate the chatbot,” Schramm said. The bank uploaded all different kinds of questions that a customer can ask that were produced by ChatGPT, he added.
Fifth Third’s chatbot boasts an accuracy rate of 97%, Schramm said.
FUTURE LOOK: The bank plans to open up to 35 branches across the country, with a focus on the Southeast, Spence said on today’s earnings call.
The bank plans 10 to 15 new branches in the Southeast this year, Spence said. Nearly 31% of Fifth Third branches were in the Southeast at the end of Q1, compared with 20% in the third quarter of 2018, according to the bank’s earnings report.
“Since 2018, we have built more than 100 branches in the Southeast,” Spence said. “We continue to invest in opening new branches and increase marketing spend to drive household growth.”
Fifth Third reported a total of 1,070 branches at the end of Q1, just one more than Q1 2023, according to the bank’s earnings statement.
The bank also expects its noninterest expenses “to be down approximately 6% compared to the first quarter due to the seasonal compensation and benefits cost in the first quarter,” Spence said.
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