Citi Group Reveals Gains from Digital Transformation Amid Workforce Reduction

Jane Fraser, Chief Executive Officer of Citi Group, has provided insights into the bank’s strategic move towards bolstering efficiency through substantial investments in digital transformation.
digital transformation of CitiJane Fraser emphasized that the focus of Citi’s technology investments extends beyond transformation, targeting digital innovation, new product development, improvements in client experience, and vital areas supporting infrastructure such as cloud and cybersecurity.

Mike Whitaker, who assumed the role of Citi’s Head of Operations & Technology in November 2018, has been instrumental in driving the bank’s digital transformation strategy forward.

Citi’s technology spending has touched $12.2 billion in 2023 vs $11.2 billion in 2022 and $9.9 billion in 2021.

During an analyst call, Citi revealed that there’s significant amount of progress in its digital strategy, with digital deposits witnessing a 14 percent increase and active digital users rising by 6 percent. The bank’s robust investments have played a crucial role in expanding its product suite, enhancing digital capabilities, automating processes, and capturing synergies within its client organization.

However, in a contrasting move, Citigroup disclosed plans to cut 20,000 jobs over the next two years, acknowledging a clearly disappointing quarter marked by one-off charges, leading to a $1.8 billion loss. This move constitutes approximately 8 percent of Citi’s global workforce, currently standing at 239,000, with Chief Financial Officer Mark Mason citing a global reorganization as the reason behind the layoffs.

The bank highlighted that the expense growth continued to be driven by transformation and business-led investments, volume-related costs, and other investments in risk, controls, and technology. Citi has also outlined its commitment to fulfilling regulatory expectations, emphasizing its unique role in the global financial system.
Citibank technology spend in 2023Jane Fraser, during an analyst presentation, shared details of the transformation and technology spending from 2021 to 2023.

Citi has centralized security platform with integrated digital fraud capabilities enabling more effective authentication driving reduction in fraud loss / expense.

Citi in 2023 launched initial set of capabilities for strategc wholesale credit production platform.

Compensation amount has touched $1.5 billion in 2023 vs $1.3 billion in 2022 vs $500 million in 2021. The growth was largely driven by additional headcount in data and risk and control.

Citi has replaced consulting resources with internal hires and reduced spening towards consulting to $300 million from $700 million.

She stated that over the past three years, approximately 30 percent of the transformation investments were directed towards technology, amounting to $12.2 billion in 2023 alone.

Citi has reduced the account opening cycle time by 40 percent for Private Bank via the implementation of automated ID verification, KYC automation and straight-through processing.

Citi said the new Cloud-based version of CitiDirect transaction platform is now live for over 70 percent of digital corporate and commercial users.

Citi has deployed tooling to automate software releases generating annualized increase of over 15 days of developer capacity.

In 2023, Citi automated independent price verificationfor more than 90 percent of fixed income and equity security’s, reducing manual controls.

Jane Fraser highlighted the ongoing modernization of the bank’s tech infrastructure, enabling the delivery of new capabilities to clients and the consolidation of trading and reporting platforms.

Despite a 9 percent increase in expenses, primarily attributed to continued investments in technology, product innovation, and client experience, Citi outlined three key drivers expected to reduce expenses: organizational simplification, elimination of stranded costs, and productivity savings from transformation and technology investments.

This strategic approach is anticipated to lead to a net reduction of 20,000 employees (excluding Mexico) and generate a net run rate saving of $2 billion to $2.5 billion over the medium term, supporting Citi’s path to expenses ranging between $51 billion to $53 billion, subject to volume-related expenses.

Rajani Baburajan

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