US banks are wasting money on talent and technology

Investments in U.S. top banks jumped by more than $ 6.6bn, or 10%, in the recent quarter compared to the same period last year when managers paid talent and expertise to strengthen their businesses against increasing competition almost everywhere.

The increase in funding for JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, and Citigroup surprises experts. Many had predicted that the amount of money the banks would spend on living would be slightly lower this year because the extra money that goes into doing business during the epidemic is gone.

However, in most meetings convened this week to discuss quarterly earnings after three months, the directors set out the annual salaries for savings and savings in technology and advertising.

“There are fears among investors that this is a business venture so that customers do not bleed to the point of fintechs,” said Autonomous Research Bank expert Brian Foran.

Price increases in many US banks are increasing the growth rate as banks struggle with higher interest rates in the past and a slight drop in debt.

Losses in five banks rose by 21% in the second quarter compared to 2019, before the outbreak, according to findings this week. But second quarter earnings increased by 10% compared to 2019.

Although the use of technology has been on the rise for many years, the proliferation of digital media during the epidemic has forced administrators to add even more.

“Urgency is important when you talk to bank managers it seems to be on the rise every day,” Foran said.

More spending represents a shift in the way banks react to the last financial crisis, while many rely on lower inflation to maximize profits. But promotional programs have enabled banks to avoid the amount of debt that comes as a result of the epidemic as regulators expect, meaning they have more money to spend.

“We recognize, especially as a result of the recovery, another opportunity to use the permit,” Citigroup chief financial officer Mark Mason said this week after the bank said a 7% increase in price. “We will not miss this opportunity.”

Banks face increasing competition in almost every aspect of their business. Financially sound financial companies now have the funds to set up major events on their own do not rely on banks, and fintech companies are pushing the boundaries in the financial management business and attracting more customers away from traditional banks and less money is needed.

Jamie Dimon, chief executive of JPMorgan, warned of a reduction in the share of banking companies in US financial letters in its annual entry letter to shareholders in April. The bank this week raised their annual interest rate by 1% to $ 71bn.

“If we can get more money to spend we will waste it,” Dimon told the bank.

Remuneration, which is the largest investment in the project to date, rose 7% in five banks in the second quarter compared to last year when it paid for talent.

Financial banks such as Citigroup and JPMorgan have raised payments to savings investors weakness during the epidemic, and the Bank of America has offered to increase its minimum wage to $ 25 an hour.

Businesses such as the savings bank and job-related fines have also met expectations for this year, which should boost bonuses.

As part of its technical expertise, banks are recruiting more professionals and scientists, which increases their mid-term payroll, says Jan Bellens, global banking manager and chief marketing officer at EY.

Annual advertising fees also raise 46 percent per year for the whole group when lenders promote advertising credit card opportunities trying to jump-start credit growth and bank depositors are back Drink and dine with potential customers closed last year.

“The banks are in the whole group and they are all ready to fight for money. Fighting means spending more money on growing up, ”says Mike Mayo, a banking analyst at Wells Fargo.

Some of the banking assets also increase revenue such as additional costs for Morgan Stanley to follow two major covenants and rules money in Citigroup.

Banks expect the latest technology to produce better than previous experiments. In recent years the use of technology has failed to reduce the cost of doing business with the banking system, and the efficiency of banks – the amount of value as part of financing – remains sharply higher than 50% for years.

Spending large sums of money in the face of financial difficulties can make it difficult to sell to bankers who are closely monitoring the flow of funds.

Vivian Merker, a consultant at Oliver Wyman, said: “It’s very difficult for investors to understand the old technological benefits that are being developed here.” “Among other things, because in history we have been promised other promises, but not fulfilled them because no one knows the future.”