Wells Fargo pulled back on its branch footprint as digital and mobile banking adoption climbed in the first quarter. 

“Our branches are becoming more advice-focused … [and] we are modernizing and optimizing our branch network,” Chief Executive Charlie Scharf said today during the bank’s Q1 earnings call. “We continue to invest in talent, technology and branches to optimize customer experience.”

The bank aims to reduce its branch footprint but is investing in refurbishing the remaining branches, Scharf said.

In the first quarter, the $1.7 trillion bank reduced its branch footprint 6% year over year to 4,247. Meanwhile, the number of mobile active users grew 6% YoY to 30.5 million and digital banking usership increased 3% YoY to 35.5 million, according to the bank’s earnings report. 

The San Francisco-based bank also reported a non-interest expense of $14.3 billion, up 5% YoY, partly driven by increased tech spend, Scharf said. 

The bank’s tech spending reached $1 billion, up 14% YoY, according to the earnings report. 

THE BIG PICTURE: Wells Fargo’s banking peers JPMorgan and Citi also increased Q1 tech spend in the hunt for new efficiency. JPMorgan upped its tech spend 11% YoY to $2.4 billion, while Citi’s ticked up 6% YoY to $2.2 billion. 

BY THE NUMBERS: In Q1, Wells Fargo reported: 

• Net income of $4.6 billion, down 7% YoY; 
• An efficiency ratio of 69, up from 66 a year ago; and 
• Net interest income of $12.2 billion, down 8 % YoY. 

NOTEWORTHY: Analysts expect Wells Fargo’s tech spend to remain elevated through 2024 due to ongoing efficiency initiatives, according to an April 3 report from Bank of America Securities. 

Those initiatives include the bank’s AI efforts, including its pipeline of 191 AI, machine learning and natural language processing features and its creation of an internal generative AI council, Steve Hagerman, chief information officer of consumer technology at Wells Fargo, said last month at Bank Automation Summit U.S. 2024 in Nashville, Tenn.  

FORWARD LOOK: Tech investment is set to continue, Scharf said. The bank will spend on tech and talent to “strengthen corporate and investment banking,” he said.

During the quarter, Doug Braunstein began as Wells Fargo’s new vice chairman to grow its investment banking reach and improve its client approach, CEO Scharf said. 

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