Need to Know
- Citi’s banking group expects to save $600 million this year through various advances in technology and automation.
- To facilitate the changes, Citi is adding 2,500 coders and data scientists to its team this year alone.
- Rather than disrupting the industry, Citigroup plans to collaborate with fintech partners in order to innovate and save resources.
- Within the last three months, the bank has invested in quantum finance, worked with Google to open checking accounts, and partnered with PayPal.
In its latest effort to advance its tech strategy, Citigroup has announced it will be adding 2,500 coders to its team. The banking group estimates that advances in technology and investments in electronic trading could save $600 million this year.
Citi’s announcement comes about a month after a study found that automation can save North American banks $71 billion by 2025. Competitor banks Goldman Sachs and JPMorgan Chase have both also increased their teams of coders in the past year, as has Bank of America, with the addition of 3,600 employees last year.
The US’ third-largest bank aims to hire these 2,500 programmers to join teams in its institutional clients group, which includes traders and investment bankers. Data scientists will also join the ranks.
“One could argue that most, if not all, of the market’s evolution over the past decade has come because of access to data and the ability to put it to work,” said Kevin McPartland, head of research in Citi’s market structure and technology group.
This isn’t the only example of Citigroup’s investment in tech. Earlier this year, the bank confirmed they are ramping up research in quantum finance, which would allow them to more accurately quantify their risk. If one of the major banks breaks ahead of others in this field, it could represent a major competitive advantage in the industry.
Citigroup has also recently partnered with PayPal in launching a digital wallet payment option, which now enables customers to seamlessly move money across wallets and countries without having to incur large wire transfer fees. And the bank has partnered with Google to offer digital checking accounts, which will provide the added benefit of access to Google’s ability to work with large sets of data and turn that information into value-add products.
These investments represent a larger shift in Citigroup’s attitude towards fintech: collaboration over disruption.
“Contrary to the common belief, I think there is more opportunity for collaboration with fintech than disruption,” said Naveed Sultan, global head of treasury and trade solutions for Citi at the Mobile World Congress tradeshow in 2018.
“It’s not about robots replacing people, and it’s not about people fighting with the machines. It’s them working together as artificial intelligence plus human intelligence,” Roman Regelman, the bank’s senior executive vice president and head of digital, added more recently. “When they work together, we have something very different that fundamentally unlocks something neither can do.”
Citigroup allocates about $8.5 billion per year, or 20% of its expenses, toward technology, slightly less than its major competitors.