U.S. Bank invested in digital capabilities within its payments business during the third quarter of 2023 as it shifted toward a more tech-led revenue approach. 

Tech spend at the $668 billion bank was up 20% year over year to $511 million, according to the bank’s Q3 earnings presentation. 

“Within payments services, we continue to invest in our digital capabilities, expanding our payments ecosystem and optimizing our distribution and emphasis on expanded partnerships and integrated capabilities,” Chief Executive Andrew Cecere said today during the bank’s Q3 earnings call. 

BIGGER PICTURE: The bank has a multiyear investment strategy in e-commerce and tech-led revenue initiatives, according to the earnings presentation. 

Total payments revenue during Q3 accounted for 25% of the bank’s net revenue, according to the presentation. 

“We’ll continue to support tech-lead growth across merchant processing and increase opportunities across other areas of our payment services businesses,” Cecere said. 

BY THE NUMBERS: U.S. Bank posted in Q3: 

• The efficiency ratio was 50.3%, up from 43.2% during the same period last year; 
• Noninterest income increased 11% YoY to $4.3 billion; 
• Noninterest expenses grew 11% YoY to $3.6 billion; and 
• Total net revenue reached $2.5 billion, up 7% YoY. 

NOTEWORTHY: The bank continued its integration of Union Bank in Q3, according to its earnings presentation. Union Bank digital enrollment post-conversion was 590,000 in September, up from 430,000 in June.  

The merger and integration costs incurred to date are $1.1 billion with the total expected to reach $1.4 billion, according to the presentation.  

“We continue to be on track to realize approximately $900 million in cost synergies, which we expect to be fully reflected in our run rate as we head into the year 2024,” Cecere said about the merger. 

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