Financial institutions looked to automation in the second quarter to reduce costs and create more efficient operations. 

The $3.2 trillion Bank of America, for one, saw its Q2 noninterest expenses increase by 5% year over year to $16 billion.

U.S. Bank, Goldman Sachs and Wells Fargo increased their tech spends while BNY Mellon grew its software and equipment spend 11% YoY to $450 million.  

JPMorgan was the only outlier among major banks, as its tech spend decreased for a third consecutive quarter, by 5% YoY to $2.3 billion. 

Focus on automation 

In Q2, Citibank, Citizens Bank and Fifth Third Bank leaned into automation. 

Citibank is looking to double down on automation to improve efficiency and cost effectiveness, Chief Financial Officer of Citibank Mark Mason said during the bank’s earnings call on July 14. The $1.7 trillion bank increased its technology and communications spend 12% YoY to $2.3 billion in Q2. 

Fifth Third Bank also said it aims to invest “in the core platform to bring automation,” which will bring intermediate positive expense outcomes, Chief Executive Tim Spence said during the bank’s earnings call last week. The $207 billion bank’s Q2 tech expense jumped 16% YoY to $114 million. 

Citizens Bank reported that it is exploring automation and AI opportunities to improve customer experience and drive cost efficiency. The $221 billion bank is looking to upgrade its operations through process reengineering, automation and AI, along with improving the customer journey by leveraging generative AI, according to its earnings presentation.  

Digital, mobile banking usership climbs 

JPMorgan saw its active mobile users increase in Q2 by 10% YoY to 52 million, while Fifth Third reported that 73% of its customers were digitally active in Q2 compared with 69% in Q1. 

Bank Of America reported its AI-driven chatbot, Erica, has surpassed $1.5 billion in client interactions since its launch in 2018. The company also reported a 7% YoY increase in digital banking users to 46 million. 

Truist Bank’s active mobile banking users jumped 6.9% sequentially to 4.6 million in the quarter.  

Wells Fargo reported on July 14, that its digital usership rose by 2% YoY to 34.2 million in Q2 from 33.2 million. 

Hiring freeze 

Financial institutions are being cautious with hiring and headcount plans as they try to keep operational costs down amid an uncertain economic environment.  

PNC Bank upped its 2023 improvement plan savings outlook by $50 million in the second quarter, increasing its cost-reduction efforts to $450 million, up from the previously announced $400 million, according to the bank’s earnings supplement. 

Citizens Bank’s salary and benefits expenses dropped by 2% YoY to $601 million, per the bank’s earnings supplements, while Bank of America’s headcount dipped 1% sequentially to 215,546. 

For Bank of America, costs rose in Q2, but the bank reported that its employee turnover rate dropped by half YoY, meaning in the long term “we’re not training and hiring as many people,” Bank of America Chief Executive Brian Moynihan said during the Q2 earnings call. 

Wells Fargo’s headcount dropped 4% YoY to 233,834 in Q2, while Goldman Sachs reduced its headcount by 5% YoY to 44,600 to streamline operations. 

Looking ahead to the second half of the year, Wells Fargo headcount is expected to continue to fall, Chief Executive Charles Scharf said during its earnings call.