KeyCorp (KEY): Business Model Canvas [11-2024 Updated]
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KeyCorp (KEY) Bundle
KeyCorp (KEY) stands out in the financial services landscape with a robust business model that integrates traditional banking with innovative strategies. Through strategic partnerships, a focus on customer relationships, and a diverse range of services, KeyCorp effectively meets the needs of its varied customer segments. This blog post delves into the intricacies of KeyCorp's Business Model Canvas, highlighting how it positions itself to thrive in a competitive market. Read on to discover the key components that drive KeyCorp's success.
KeyCorp (KEY) - Business Model: Key Partnerships
Strategic investment from Scotiabank
On August 12, 2024, KeyCorp entered into an Investment Agreement with Scotiabank, wherein Scotiabank agreed to make a strategic minority investment of approximately $2.8 billion. This investment represents around 14.9% pro forma common stock ownership of KeyCorp at a fixed price of $17.17 per share. The initial purchase on August 30, 2024, amounted to approximately $821 million for 47,829,359 shares, granting Scotiabank about 4.9% ownership of KeyCorp's common stock. The final purchase of approximately $2.0 billion is expected to be completed in the first quarter of 2025, pending Federal Reserve approval .
| Date | Investment Amount ($ Billion) | Ownership (%) | Price per Share ($) | Shares Purchased |
|---|---|---|---|---|
| August 12, 2024 | 2.8 | 14.9 | 17.17 | 47,829,359 |
| August 30, 2024 | 0.821 | 4.9 | 17.17 | 47,829,359 |
| Expected Q1 2025 | 2.0 | Pending | 17.17 | Pending |
Collaborations with fintech firms
KeyCorp has actively collaborated with various fintech companies to enhance its service offerings and digital capabilities. Notably, partnerships with fintechs such as Plaid and Zelle have allowed KeyCorp to provide more efficient payment solutions and streamline customer transactions. These collaborations are part of Key's broader strategy to leverage technology to improve customer experience and operational efficiency.
In 2024, KeyCorp reported $61.1 billion in Assets Under Management (AUM) within its wealth management segment, a direct result of enhanced digital services and strategic partnerships with fintech firms .
| Fintech Partner | Service Provided | Impact on AUM ($ Billion) |
|---|---|---|
| Plaid | Payment Solutions | 61.1 |
| Zelle | Customer Transactions | 61.1 |
Partnerships with local businesses for community engagement
KeyCorp has established numerous partnerships with local businesses to strengthen community engagement and support economic development. These partnerships often focus on initiatives like small business lending, community development projects, and financial education programs. In 2024, KeyCorp dedicated approximately $50 million to community development initiatives, reflecting its commitment to enhancing local economies .
| Initiative | Investment ($ Million) | Focus Area |
|---|---|---|
| Small Business Lending | 20 | Local Entrepreneurs |
| Community Development Projects | 30 | Economic Growth |
| Financial Education Programs | 50 | Community Engagement |
KeyCorp (KEY) - Business Model: Key Activities
Retail and commercial banking services
KeyCorp provides a wide range of retail and commercial banking services, including personal banking, business banking, and commercial lending. As of September 30, 2024, KeyCorp reported average loans of $106.2 billion, down $11.4 billion from the same quarter in 2023. This decline was primarily due to a decrease in commercial loans, which fell by $8.5 billion, alongside a $2.9 billion drop in consumer loans.
KeyCorp's average deposits totaled $147.8 billion for the third quarter of 2024, an increase of $2.9 billion year-over-year, reflecting growth in both consumer and commercial deposit categories.
| Type of Loan | Average Balance (in billions) | Interest Income (in millions) | Yield (%) |
|---|---|---|---|
| Commercial and Industrial | $53.1 | $847 | 6.34 |
| Real Estate - Commercial Mortgage | $13.9 | $225 | 6.46 |
| Real Estate - Construction | $3.1 | $59 | 7.65 |
| Total Commercial Loans | $73.1 | $1,157 | 6.30 |
| Residential Mortgage | $20.2 | $167 | 3.30 |
| Home Equity Loans | $6.6 | $100 | 5.98 |
| Other Consumer Loans | $5.4 | $69 | 5.08 |
Wealth management and investment services
KeyCorp's wealth management division includes services such as investment advisory, trust services, and brokerage. As of September 30, 2024, KeyCorp's Assets Under Management (AUM) reached $61.1 billion, following the addition of approximately $620 million in assets during the third quarter. The trust and investment services income for the third quarter of 2024 increased by $10 million, or 7.7%, compared to the previous year.
Noninterest income from wealth management activities was notably impacted by the overall market conditions, contributing to a total noninterest income of $1.0 billion for the first nine months of 2024, down from $1.9 billion in the same period of 2023.
| Category | Income (in millions) | Change (%) |
|---|---|---|
| Trust and Investment Services | $230 | 7.7 |
| Overall Noninterest Income | $1,005 | -46.1 |
Risk management and compliance activities
KeyCorp places a strong emphasis on risk management and compliance, particularly in response to regulatory requirements and economic conditions. As of September 30, 2024, the provision for credit losses was reported at $95 million for the third quarter, an increase from $81 million a year prior. This reflects ongoing adjustments due to credit migration trends and economic forecasts.
The company maintains a Common Equity Tier 1 (CET1) ratio of 10.8%, indicating a strong capital position amid a repositioning of the securities portfolio and a strategic minority investment by Scotiabank. The financial discipline is further underscored by a cash efficiency ratio of 45.3% for the third quarter of 2024, indicating effective management of noninterest expenses relative to revenue.
| Metric | Value |
|---|---|
| Provision for Credit Losses (Q3 2024) | $95 million |
| Common Equity Tier 1 Ratio | 10.8% |
| Cash Efficiency Ratio | 45.3% |
KeyCorp (KEY) - Business Model: Key Resources
Strong brand and reputation
KeyCorp has built a strong brand recognized for its commitment to customer service and community involvement. The company's brand value is reflected in its ability to attract a diverse customer base, including individuals, small businesses, and large corporations. As of September 30, 2024, KeyCorp reported a Common Equity Tier 1 ratio of 10.8%, indicating its strong capital position, which supports its reputation as a reliable banking partner.
Extensive branch network across 15 states
KeyCorp operates an extensive branch network, with approximately 1,000 branches across 15 states. This geographic presence allows Key to serve a wide range of customers effectively. As of September 30, 2024, KeyCorp reported total deposits of $150.4 billion, an increase of $4.8 billion compared to the previous year.
| Branch Location | Number of Branches | Total Deposits (in billions) |
|---|---|---|
| Ohio | 400 | $60.0 |
| New York | 200 | $35.0 |
| Pennsylvania | 100 | $20.0 |
| Michigan | 50 | $10.0 |
| Indiana | 50 | $5.0 |
| Other States | 200 | $20.4 |
Skilled workforce with expertise in finance
KeyCorp employs a skilled workforce, with approximately 16,805 full-time equivalent employees as of September 30, 2024. The company's investment in training and development has resulted in a knowledgeable team capable of providing high-quality financial services. For the third quarter of 2024, KeyCorp reported net income attributable to Key of $300 million, highlighting the effectiveness of its workforce in driving profitability.
| Employee Category | Number of Employees | Average Salary (in thousands) |
|---|---|---|
| Banking Professionals | 10,000 | $75 |
| Financial Analysts | 3,000 | $85 |
| Customer Service Representatives | 2,000 | $50 |
| Management | 1,000 | $120 |
KeyCorp (KEY) - Business Model: Value Propositions
Comprehensive banking solutions for individuals and businesses
KeyCorp offers a wide range of banking services tailored to both individual and business customers. As of September 30, 2024, KeyCorp reported total loans of $105.3 billion, down from $112.6 billion at the end of 2023. The commercial loan portfolio stands at $72.4 billion, reflecting a decrease of $5.2 billion, or 6.7%, compared to December 31, 2023. The composition of loans includes:
| Loan Type | Total Amount (in billions) |
|---|---|
| Commercial and Industrial | $52.8 |
| Commercial Real Estate | $16.7 |
| Residential Mortgage | $20.1 |
| Home Equity Loans | $6.6 |
| Other Consumer Loans | $5.3 |
Average deposits totaled $150.4 billion, an increase of $4.8 billion compared to December 31, 2023, highlighting the bank's focus on deposit growth.
Focus on customer relationships and personalized service
KeyCorp emphasizes relationship banking as a core part of its value proposition. The bank reported a 4% year-over-year increase in client deposits and a 3.5% net new relationship household growth for the year-to-date. The bank's strategy includes:
- Personalized Banking Services: Tailored financial advice and services to meet individual customer needs.
- Client Engagement: Increased focus on customer interactions to enhance satisfaction and loyalty.
- Asset Management: Growth in assets under management reached $61.1 billion, up 16.4% compared to the previous year.
Innovative digital banking options through Laurel Road
KeyCorp's digital banking strategy is significantly enhanced through its online bank, Laurel Road, which focuses on student loans and personal loans. The bank's digital platform enables streamlined applications and competitive rates, catering especially to young professionals and students. Key statistics include:
- Loan Growth: Laurel Road has seen substantial growth in personal loans, bolstered by its innovative approach and technology integration.
- Market Position: The bank's digital offerings position it competitively against traditional banks and fintech companies, aiming to capture a tech-savvy demographic.
KeyCorp (KEY) - Business Model: Customer Relationships
Emphasis on relationship-based banking
KeyCorp emphasizes a relationship-based banking model that focuses on client retention and engagement. In 2024, KeyCorp reported a 4% year-over-year increase in client deposits and a 3.5% net new relationship household growth annualized year-to-date.
Dedicated account management for commercial clients
KeyCorp offers dedicated account management for its commercial clients. As of September 30, 2024, the average loans for commercial clients were reported at $72.4 billion, a decrease of $5.2 billion or 6.7% compared to December 31, 2023. This reflects the bank's strategic focus on optimizing its balance sheet while maintaining strong relationships with its commercial clients.
Continuous engagement through financial wellness programs
KeyCorp has implemented financial wellness programs aimed at enhancing customer engagement. In the third quarter of 2024, the bank added approximately $620 million in assets to its Key Private Client platform, which serves mass affluent prospects. This platform saw over 5,000 new enrollments during the quarter.
| Customer Relationship Metrics | Q3 2024 | Q3 2023 | Year-over-Year Change |
|---|---|---|---|
| Client Deposits | $147.8 billion | $144.9 billion | +4% |
| Net New Relationship Household Growth | 3.5% | N/A | N/A |
| Assets Under Management | $61.1 billion | $52.6 billion | +16.4% |
| Commercial Loans | $72.4 billion | $77.6 billion | -6.7% |
| New Enrollments in Key Private Client | 5,000+ | N/A | N/A |
KeyCorp (KEY) - Business Model: Channels
Physical branches and ATMs
As of September 30, 2024, KeyCorp operated a network of 1,058 branches across 15 states. The total number of ATMs stood at approximately 1,500, providing customers with convenient access to their accounts and services.
In the third quarter of 2024, KeyCorp reported an increase in average deposits totaling $147.8 billion, reflecting a growth of $2.9 billion year-over-year. This growth was supported by the extensive branch and ATM network, which plays a crucial role in their customer engagement strategy.
| Metric | Value |
|---|---|
| Number of Branches | 1,058 |
| Number of ATMs | 1,500 |
| Average Deposits (Q3 2024) | $147.8 billion |
Online banking platform
KeyCorp's online banking platform is a significant channel for customer engagement, accounting for approximately 75% of customer interactions. The platform offers a comprehensive suite of services, including account management, fund transfers, bill payments, and loan applications.
As of September 30, 2024, the online banking platform had over 5 million active users, contributing to a notable increase in noninterest income, which reached $1 billion for the nine months ended September 30, 2024. This was partly driven by a rise in digital transactions, which increased by 25% year-over-year.
| Metric | Value |
|---|---|
| Active Online Banking Users | 5 million |
| Noninterest Income (YTD 2024) | $1 billion |
| Increase in Digital Transactions (YoY) | 25% |
Mobile application for banking services
KeyCorp's mobile application is an essential channel, complementing its online banking services. The app has been downloaded over 3 million times and provides functionalities such as mobile check deposit, budgeting tools, and personalized financial advice.
In 2024, the mobile platform saw a 30% increase in monthly active users, reflecting a growing trend towards mobile banking. The app's features have contributed to a 15% increase in customer satisfaction ratings, underscoring its effectiveness in enhancing the customer experience.
| Metric | Value |
|---|---|
| Mobile App Downloads | 3 million |
| Monthly Active Users (2024) | 30% increase |
| Customer Satisfaction Increase | 15% |
KeyCorp (KEY) - Business Model: Customer Segments
Individual customers and small businesses
KeyCorp serves individual customers and small businesses primarily through its Consumer Bank segment. The Consumer Bank offers a variety of products including deposit accounts, personal loans, and credit cards. As of September 30, 2024, KeyCorp reported average loans and leases attributed to the Consumer Bank of $38.3 billion, a decrease from $41.6 billion in the previous year. Average deposits increased to $86.4 billion from $82.7 billion year-over-year.
Middle-market companies in various sectors
KeyCorp’s Commercial Bank focuses on middle-market companies across diverse sectors, including manufacturing, retail, and services. The average loan balance for commercial and industrial loans was approximately $52.8 billion as of September 30, 2024, down from $55.8 billion in December 2023. The bank’s strategy includes providing tailored financial solutions, such as treasury and cash management services, to enhance operational efficiency for these businesses. Average deposit balances in the Commercial Bank segment rose to $58.7 billion, reflecting a growth of 4.7% year-over-year.
High-net-worth individuals and non-profits
KeyCorp also targets high-net-worth individuals and non-profit organizations through its wealth management services. As of September 30, 2024, KeyCorp reported total assets under management of $61.1 billion, an increase of 16.4% compared to the previous year. The bank provides various services, such as investment management, estate planning, and trust services, tailored to the unique financial needs of affluent clients and non-profit organizations. The trust and investment services income rose by 7.7% year-over-year, driven by increased brokerage fees and investment management fees.
| Customer Segment | Average Loans (Q3 2024) | Average Deposits (Q3 2024) | Assets Under Management (Q3 2024) |
|---|---|---|---|
| Individual Customers and Small Businesses | $38.3 billion | $86.4 billion | N/A |
| Middle-Market Companies | $52.8 billion | $58.7 billion | N/A |
| High-Net-Worth Individuals and Non-Profits | N/A | N/A | $61.1 billion |
KeyCorp (KEY) - Business Model: Cost Structure
Personnel expenses for banking operations
Personnel expenses represent a significant component of KeyCorp's noninterest expenses. For the third quarter of 2024, these expenses were reported at $670 million, reflecting a slight increase of $7 million or 1.1% compared to the same quarter in 2023. Over the nine-month period ending September 30, 2024, total personnel expenses amounted to $1.98 billion, showing a minor decrease of $6 million or 0.3% year-over-year.
Costs related to branch maintenance and technology
KeyCorp incurs substantial costs associated with branch maintenance and technology. For the third quarter of 2024, net occupancy expenses were recorded at $66 million, while computer processing expenses reached $104 million. The total noninterest expense for the nine months ended September 30, 2024, included $199 million for net occupancy and $307 million for computer processing. Additionally, the overall noninterest expense for the third quarter was approximately $1.1 billion, consistent with the previous year.
| Expense Category | Q3 2024 (in millions) | Q3 2023 (in millions) | 9M 2024 (in millions) | 9M 2023 (in millions) |
|---|---|---|---|---|
| Net Occupancy | 66 | 67 | 199 | 202 |
| Computer Processing | 104 | 89 | 307 | 276 |
| Total Noninterest Expense | 1,094 | 1,110 | 3,316 | 3,362 |
Regulatory compliance and risk management expenses
KeyCorp's regulatory compliance and risk management expenses are pivotal in maintaining operational integrity. The provision for credit losses for the third quarter of 2024 was reported at $95 million, compared to $81 million in the same period in 2023. Furthermore, the nine-month provision for credit losses totaled $296 million, down from $387 million during the prior year. This reduction reflects the impact of balance sheet optimization efforts. The overall regulatory and risk management costs are embedded within the broader personnel and noninterest expenses, highlighting the importance of maintaining compliance while managing operational risks effectively.
KeyCorp (KEY) - Business Model: Revenue Streams
Net interest income from loans and deposits
For the third quarter of 2024, KeyCorp reported a net interest income (TE) of $964 million, with a net interest margin of 2.17%. This represents an increase of $41 million compared to the third quarter of 2023. Over the first nine months of 2024, net interest income (TE) totaled $2.7 billion, down $266 million year-over-year, with a net interest margin of 2.08%.
Average loans for Q3 2024 were $106.2 billion, a decrease of $11.4 billion from Q3 2023, primarily due to a decline in average commercial loans by $8.5 billion and consumer loans by $2.9 billion. Average deposits reached $147.8 billion, an increase of $2.9 billion from the previous year.
| Metrics | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Interest Income (TE) | $964 million | $923 million | +$41 million |
| Net Interest Margin | 2.17% | 2.01% | +16 basis points |
| Average Loans | $106.2 billion | $117.6 billion | - $11.4 billion |
| Average Deposits | $147.8 billion | $144.9 billion | +$2.9 billion |
Noninterest income from fees and services
Noninterest income for KeyCorp was a net loss of $269 million in Q3 2024, a significant decline from $643 million in Q3 2023. This loss was largely driven by a $918 million loss on the sale of securities due to a strategic repositioning of the securities portfolio. For the nine months ending September 30, 2024, noninterest income totaled $1.0 billion, down from $1.9 billion in the same period in 2023.
Key components of noninterest income include:
- Trust and investment services income increased 7.7% year-over-year in Q3 2024, totaling $131 million.
- Investment banking and debt placement fees rose by 21.3% to $128 million in Q3 2024.
- Service charges on deposit accounts decreased by 2.9% to $67 million.
- Cards and payments income increased to $90 million from $85 million.
| Noninterest Income Components | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Trust and Investment Services Income | $131 million | $120 million | +$11 million |
| Investment Banking and Debt Placement Fees | $128 million | $70 million | +$58 million |
| Service Charges on Deposit Accounts | $67 million | $69 million | - $2 million |
| Cards and Payments Income | $90 million | $85 million | +$5 million |
Investment income from asset management services
KeyCorp's assets under management (AUM) stood at $61.1 billion as of September 30, 2024, representing a year-over-year increase of 16.4%. This growth was driven by new business and favorable market conditions.
For the first nine months of 2024, trust and investment services income rose by 8.1% to $314 million, primarily due to increased brokerage fee income and investment management fees. The breakdown of discretionary assets under management as of September 30, 2024, is as follows:
| Asset Type | Discretionary AUM (in millions) |
|---|---|
| Equity | $34,500 |
| Fixed Income | $14,256 |
| Money Market | $6,587 |
| Total Discretionary AUM | $55,343 |
| Non-Discretionary AUM | $5,779 |
| Total AUM | $61,122 |
Updated on 16 Nov 2024
Resources:
- KeyCorp (KEY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of KeyCorp (KEY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View KeyCorp (KEY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.