Tech spend remained strong overall in the first quarter as the industry prepped for an economic downturn, and turbulence swept the banking world amid the collapse of Silicon Valley Bank and Signature Bank.
The $132 billion Discover Financial Services increased its technology and consulting expenses 31% year-over-year in Q1 to $232 million, according to the bank’s Q1 earnings release. “We’re a digital institution; we need to invest in technology to ensure that we keep capabilities advancing,” said John Greene, chief financial officer at Discover, during the Q1 earnings call last week.
The $1.4 trillion Goldman Sachs increased its technology and communications spend 10% YoY in Q1 to $466 million. Likewise, the $1.9 trillion Wells Fargo also upped its tech spend 2% YoY to $9.4 billion.
Although technology spend climbed, some banks looked to cut costs in other areas to make up for digital investment. For example, $188 billion KeyBank is working toward a cost reduction of 4% YoY for 2023, Chief Executive Chris Gorman said during the bank’s Q1 earnings call last week, noting the bank is looking to technology, automation and process improvement to enhance operational efficiencies.
However, as many banks upped technology expenses, Huntington Bancshares reduced its equipment spend 21% YoY to $64 million as the bank worked to reduce expenses, increase profits and regulate hiring in Q1.
Q1 technology and communication spend:
Q1 equipment spend:
AI investment
Amid AI investment at tech giants such as Google, Microsoft and IBM, banks are also working on AI advances. For example, Discover’s technology investment includes machine learning and AI efforts, according to the bank’s earnings supplement.
Similarly, Fifth Third will enhance its language model in June as part of its AI strategy to ingest more data, the bank’s Chief Information Officer Jude Schramm said at Bank Automation Summit U.S. 2023 in Charlotte, N.C., in March.
Mobile usership
Mobile usership climbed in Q1 for several financial institutions. For example, JPMorgan Chase posted an 8% YoY increase in active digital users to nearly 65 million and a 9% increase in active mobile users to 50.9 million, according to the bank’s earnings supplement.
Bank of America, Huntington, Truist and Wells Fargo also posted mobile usership growth during the quarter.
Wells “added over 500,000 mobile active customers in the first quarter, and digital logins increased 6% from a year ago,” Chief Executive Charlie Scharf said during Wells Fargo’s Q1 earnings call earlier this month.
