Barclays PLC is looking to increase its investment in technology and automation to improve customer experience and reduce costs.
The company reported an increase in operating costs of 6% year over year to £3.9 billion ($4.4 billion) in the second quarter, driven by “continued investment in talent, systems and technology,” the company’s earnings presentation stated.
“In Barclays UK, we are investing in transformation to improve service for our customers by automating, digitizing and simplifying our offering, whilst also driving lower costs,” Anna Cross, Barclays group finance director, said during the earnings call today.
THE BIG PICTURE: In March, Barclays acquired specialist residential mortgage lender Kensington Mortgage for $3.07 billion, according to a Barclays release.
Kensington uses proprietary technology, data analytics and awareness to design products and make lending decisions which help Barclays deliver “next generation, digitized consumer financial services,” the release stated.
BY THE NUMBERS: In Q2, Barclays reported;
- In Q2 2023 Barclays reported operating expense losses to $4.9 billion a 21% YoY improvement from $6.4 billion in Q2 2023.
- A 5% YoY increase in value of payments processed to $103.13 billion; and
- A 12% YoY increase in United States cards revenue to $29.5 billion.
WHAT THEY ARE SAYING: “Barclays’ cost-saving efforts are expected to continue supporting the bottom-line growth,” Zacks Equity Research noted in a report released on July 27.
The British bank’s “restructuring and business-simplifying initiatives will likely boost financials” over a medium-term outlook, the report stated.
FLASHBACK: The $33 billion bank is looking to leverage AI in its back-end operations to drive efficiency in operations while maintaining a cautious approach to the tech, Jennifer Warren, head of digital markets strategy at Barclays, said at Fintech Connect last month.
“I think you can’t really remove human oversight from the process right now,” Warren said. “Human judgment has to be a layer on top to ensure that you’re taking everything into consideration” when making a decision.
FUTURE LOOK: Barclays is expected to continue automation measures to drive cost-effectiveness as it remains “committed to driving a lower cost-to-income ratio over time,” C.S. Venkatakrishnan, Barclays Group Chief Executive said during the earnings call.
“Our focus on cost discipline delivered a cost-to-income ratio of 63% for this quarter, putting us on track to meet our guidance of ‘low 60s’ in 2023,” he added.
MARKET REACTION: Barclays stock was down by 8.84% on Thursday closing and stood at $7.84 per share.
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