PNC Financial Services Group Chief Executive Bill Demchak said he wants to position the bank to perform in a sector in which smaller firms are disappearing amid a wave of consolidation.
“It’s my strong belief that in some number of years there’s going to be a handful of dominant players across the landscape,” Demchak said in an interview Tuesday with Bloomberg Television. “There’s already three big banks who control 30-plus percent of the U.S. share. We want to be the fourth, fifth or sixth bank that helps consolidate what is a very fragmented industry here.”
Demchak’s comments come as regional banks continue to merge as a way of of countering low interest rates, tepid loan demand and a need for increased spending on technology. The mergers also offer a means of competing against bigger banks including JPMorgan Chase, which is expanding into new states and spending billions of dollars annually on digital offerings.
Demchak identified a new feature announced by PNC earlier in the day as a market-share play that would help it cement a place in a changing banking landscape. The digital offering, called Low Cash Mode, will allow customers to decide whether certain payments are processed rather than having the bank make the decision. It will also alert customers when their balance is low and give them a full day or more to address overdrafts before fees kick in.
The bank said the change would save customers $125 to $150 million in overdraft fees annually. Demchak said that amount represented a sliver of the company’s total revenue, which was $16.9 billion last year. He dismissed overdraft fees as an “unsustainable revenue stream,” and said it’s important to adapt to the challenges posed by financial-technology firms.
”The world of banking has changed, and our competitors have changed. Fintech has taught us that we need to be in service of our clients,” Demchak said. “We don’t have the protected borders we once had that basically allowed banks to do what they want, where we just competed with each other. Now we compete with technology.”
Shares of PNC fell 1.8% to $177.62 Tuesday. The bank is scheduled to report first-quarter earnings Friday.
