Wells Fargo is leveraging technology and automating investments to streamline its operations as the $1.6 trillion bank continues to trim its workforce.
“I would say there are very few parts of the company that are optimized at this point,” Mike Santomassimo, chief financial officer at Wells Fargo, said today during the bank’s third-quarter earnings call. “Now, some have more opportunity than others [for automation], some require investment in terms of automation and technology.”
The San Francisco-based bank reported a headcount of 227,000 employees in Q3, compared with 239,000 in Q3 2022.
Wells Fargo’s non-interest expenses dipped 8% year over year to $13.1 billion due to staff cuts, the impact of efficiency initiatives and investments in technology and equipment, according to the bank’s earnings presentation.
The bank reported that its technology, telecommunications and equipment expenses increased 22% YoY to $975 million. Meanwhile, non-personnel expenses jumped 7% YoY to $281 million on higher technology, equipment and advertising spending.
THE BIG PICTURE: Wells Fargo is not the only bank to have cut jobs to reduce expenses in Q3 while increasing investment in technology.
Ally slashed nearly 5% of its workforce this month, and Citibank also said it would be reducing headcount as part of a broader effort to restructure, according to its earnings call today.
BY THE NUMBERS: Wells Fargo also reported:
- $13.1 billion in net interest income, up 3.03% YoY;
- 34.6 million active digital users, up 2.9% YoY;
- $1.35 trillion in deposits, down 3.1% YoY; and
- $329 million in operating losses, down from $1.9 billion YoY.
FLASHBACK: The bank launched its AI-driven virtual assistant, Fargo, in October 2022, and now plans to use AI to improve auto lending decisions.
In a move to leverage more technology, the bank announced last week that Ken Meyer, former chief information and experience officer at Truist, will be joining Wells Fargo as chief information officer of enterprise functions technology on Oct. 23.
During the quarter, the bank teamed up with private investment management firm Centerbridge Partners to offer direct lending to middle-market companies, according to a Wells Fargo release.
NOTEWORTHY: Wells Fargo’s continued investment in technology is changing how its customers interact with the bank. Nearly 70% of its customer interactions are now digital, Jazz Samra, head of partnerships at Wells Fargo, said at Finovate Fall 2023.
MARKET REACTION: Wells Fargo’s stock was up 3.05% at $40.95 per share by 3:20 PM today.
FUTURE LOOK: Wells Fargo is increasing its investment in the Chicago region and aims to spend nearly $175 million in the next couple of years to expand its retail banking reach in the area, where it has only seven branches.
“We are also looking at targeted expansion in markets where we see opportunities for our franchise,” Santomassimo said.
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