KeyCorp, the parent company of $187 billion KeyBank, expects higher expenses in 2025, with technology initiatives among its investment priorities.

The bank this year plans to spend $900 million on technology, a 10% increase from 2024, Chief Executive Chris Gorman said today during the company’s fourth-quarter earnings call.

KeyCorp spends an average of $800 million per year on technology initiatives, Gorman said in July 2024.

2024 tech wins

KeyCorp in 2024 completed core modernization of its commercial loan and derivatives platforms, Gorman said.

“We also made significant progress on our migration to the cloud, including our contact center technology and our consumer online banking portal,” Gorman said, adding that he expects cloud migration to be completed by yearend.

KeyBank’s digital offerings include:

• Early Pay, a platform that enables users with direct deposits to access wages two days in advance;
• Key Wealth Direction, a digital wealth management tool;
• Clover App Market, a business management app;
• Online and mobile banking;
• Zelle payments; and
• MyKey, an automated virtual assistant.

BIG PICTURE: Noninterest expense in Q4 was $1.2 billion, up 12.3% from Q3 and a 10.4% decrease from Q4 2023, according to the bank’s earnings release.

Expense in Q4 2023 was unusually high due to an FDIC special assessment and pension settlement charge, Gorman said today during the call.

The overall reduction in expense from Q4 2023 was partly offset by an increase in tech spend during the quarter, according to KeyCorp’s earnings presentation. KeyCorp’s Q4 tech expenses include:

• $107 million in computer processing, up 2.9% quarter over quarter and up 16.3% year over year; and
• $20 million in equipment, flat from Q3 and down 16.7% YoY.

BY THE NUMBERS: KeyCorp in Q4 reported:

• $865 million in revenue, up 24.5% QoQ and down 43.8% YoY;
• $1.1 billion in net interest income, up 10.1% QoQ and up 14.3% YoY; and

NOTEWORTHY: KeyCorp on Jan. 15 named Mohit Ramani as its chief risk officer, effective Jan. 23.

Ramani said in the statement he intends to leverage technology to strengthen KeyCorp’s risk strategy. He joins KeyCorp as a financial services industry veteran, previously holding leadership positions at Truist, Bank of America and Goldman Sachs.

MARKET REACTION: Shares of KeyCorp (NYSE: KEY) were down 3.4% from market open to $17.68 as of market close today. KeyCorp has a market capitalization of $19.6 billion.

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