- Citi’s technology spend shot up 14% in 2022’s second quarter as the bank continues its “transformation” plans, moving forward with several key initiatives designed to bolster automation, improve its data governance and organization and make capital planning more agile, CFO Mark Mason said Friday during an earnings call.
- The bank has taken several steps to shore up automation, Mason said, including implementing a new platform that allows Citi to consolidate its 37 separate loan processing systems into one holistic service. It is also moving to further develop its risk management capabilities, he said.
- “The transformation is designed to improve our governance and processes, enhance our policies and leverage technology to strengthen our controls,” Mason said. “We've been actively investing in technology to improve automation and hiring people to stand up these efforts.”
Investment in technology is becoming a key expense driver for the bank. Expenses overall increased 8% for Citi, and 3% of that spend was driven by “transformation investments,” Mason said, with two-thirds relating to risk, control, data and finance programs.
“Approximately 25% of the investments in those programs are related to technology,” he said during Friday’s call. “And as of today, we have over 9,000 people dedicated to the transformation.”
Citi revenue for the quarter topped analyst expectations — the only large U.S. bank to do so last week, with revenue jumping 11% to $19.6 billion. JPMorgan Chase, Morgan Stanley and Wells Fargo, by comparison, reported tepid second-quarter results, with JPMorgan CEO Jamie Dimon pointing to continuing geopolitical tensions and inflation as factors that will likely continue to negatively impact the economy.
Citi’s technology and transformation spend are geared toward consolidating its platforms and services in favor of cloud-based solutions, with the bank inking an agreement with a major software provider to both modernize and move its 16 ledger platforms to one cloud-based ledger over a multiyear period, according to its earnings call.
While IT spending is expected to reach $4.5 trillion globally this year according to a Gartner prediction last week, CFOs and other key members of the C-suite such as chief information officers (CIOs) are growing more discerning with where they place those funds and towards what technologies. Gartner adjusted its forecast for overall IT growth this year from 5% to 3%, with executives facing an increasingly tight labor market — especially regarding technology skills — likely to turn more frequently to third-party firms and services rather than building out their own platforms.
Three-quarters of tech leaders expect their organizations’ tech spend to continue to grow this year, according to a July 1 CNBC survey. But companies are also likely to shell out more funds for software and advanced technologies such as artificial intelligence (AI) rather than hardware. AI, cloud computing, automation and machine learning were the top areas tech decision-makers expected to spend.