Truist CEO Aims to Enhance Banking Experience and Digital Engagement

Truist's Growth Strategy

During an earnings call on October 16, Truist's CEO Mike Lyons shared his vision for the bank's future, focusing on establishing stronger banking relationships with customers. His goal is to capture a larger portion of primary banking relationships, particularly in consumer banking.

Deposits on the Rise

Truist reported a 3.6% increase in average deposits compared to last year, along with a 1.4% rise from the second quarter of 2023. This growth was primarily fueled by contributions from wholesale clients. For the Consumer and Small Business Banking segment, deposits saw a modest year-over-year increase of 1.2%, with figures remaining flat compared to the previous quarter. The overall deposit cost experienced a slight uptick, moving up three basis points to 1.59%.

Focus on Digital Transactions

Lyons noted that Truist is committed to winning every client's Demand Deposit Account (DDA) across its branch network. To achieve this, the bank plans to invest in various products and services that reinforce checking relationships, including mobile banking solutions, credit card offerings, and enhancements to branches and ATMs. Digital banking is becoming increasingly vital, with 71% of transactions in the Consumer and Small Business Banking sectors conducted through digital channels, a 2.9% increase compared to last year.

During the quarter, spending through debit and credit cards reached $32 billion, reflecting a 4.5% growth year over year. Additionally, Truist Assist, the bank's customer support chat service, saw a significant increase in engagement, with a 54% rise in volume, totaling over 2 million interactions.

Adjusting Lending Strategies

Despite the apparent increase in customer spending, Truist has made the decision to carefully manage its consumer loan portfolio, resulting in a 2.4% decrease in average loans compared to the previous year. The bank's leadership is pivoting towards lending products that are more closely connected to deposit relationships. This includes an emphasis on credit cards, home loans, and unsecured lending, while stepping back from national single-product offerings.

Lyons mentioned that investments in the consumer banking sector will encompass various areas such as enhancing the branch and ATM networks, advancing technology infrastructure, improving digital platforms, and expanding performance-based marketing initiatives. Furthermore, a new credit card and rewards platform is also in the works.

Exploring Treasury Management Opportunities

Executives at Truist have also identified treasury management as a sector with growth potential. Lyons expressed that Truist's current client engagement in this area is relatively minimal compared to competitors. Chief Financial Officer Mike Maguire noted that treasury management fees continue to rise, indicating strong product adoption and a robust sales pipeline.

Small businesses represent another critical focus area for Truist, with Lyons highlighting their significance as effective deposit generators where lending opportunities remain underutilized.

Measuring Success

To evaluate the effectiveness of its deposit strategy, Truist is employing more explicit metrics. Lyons suggested that a successful outcome would involve quicker net new DDA account growth and a broader penetration of treasury management services. During the latest reporting period, Truist achieved positive net new checking account growth both quarter-over-quarter and year-to-date, with plans to speed up this growth through significant new investments.

In terms of credit quality, Truist reported stability outside of the Regional Acceptance Corporation (RAC) sale, with net charge-offs excluding RAC standing at 38 basis points—showing a marked contrast to the 77 basis points reported when including losses related to the portfolio sale.