Ally Bank will continue to invest in technology to gain a competitive advantage over its peers.
The bank is looking to keep expenses flat in 2024, and recent measures, like trimming its workforce by nearly 5%, will lead to “$80 million in annualized savings next year,” Chief Financial Officer Russell Hutchinson said during Ally’s third-quarter earnings call today.
Despite delinquencies ticking up due to uncertain macroeconomic conditions, Ally is well positioned to deal with auto loan defaults due to tech investments made by the bank, Hutchinson said.
“Investments in data science and technology we made within our collections and servicing teams will drive solid performance,” Hutchinson said. “Even in a challenging environment, we have a much deeper understanding of consumer payment patterns and more options to get consumers staying in their cars.”
Ally is seeing growth through its digital offerings and aims to use them to deepen customer relations, Hutchinson said.
The $197 billion bank saw a record 307,000 new customers join the platform in 2023, he said.
THE BIG PICTURE: Like Ally, PNC, Wells Fargo and Citibank, are announcing headcount cuts to drive efficiency and manage costs.
PNC reduced its headcount by 3.6% year over year in Q3 and said money saved in payroll will be invested in improving its tech stack.
New York-based Citibank also plans to reduce headcount as technology, automation and streamlining processes will help improve the bank’s efficiency, Chief Financial Officer Mark Mason said during the bank’s earnings call last week.
Wells Fargo also reduced its headcount by 5% YoY as automation is helping to optimize operations.
BY THE NUMBERS: In Q3, Ally reported:
- Net income of $296 million, down 1% YoY;
- An efficiency ratio of 62.6%, compared to 60.2% in Q3 2022;
- Total deposits of $153 billion, up 4% YoY; and
- 95,000 new retail deposit customers, up 86% YoY.
OF NOTE: Ally is working on more than 100 uses cases for generative AI, including call representative assistance and marketing assistance.
Since the start of the year, Ally has been investing in its digital capabilities to improve customer experience. The Detroit-based bank hired many tech workers to bolster its digital offerings.
MARKET REACTION: Shares of Ally Financial [NYSE: ALLY] were up 0.87% from market open to $25.62 as of market close today. Ally has a market capitalization of $7.6 billion.
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