Dive Insight:
- Citigroup saw returns from its ongoing modernization efforts during the three-month period ending Sept. 30, bank executives said Tuesday.
- “While we continue making substantial investments in our number one priority — our transformation — the efficiencies gained from our simplification and other efforts drove a 2% reduction in expenses,” CEO Jane Fraser said in the bank’s Q3 2024 earnings announcement.
- The bank reported $13.3 billion in expenses, down from $13.4 billion in Q2 and from $13.5 billion a year ago. “Although a lot more work remains, we've started to see benefits from our prior investments play through,” CFO Mark Mason said during a Tuesday earnings call. “We continue to simplify our technology infrastructure, retiring over 450 applications year to date and now over 1,250 since our 2022 investor day.”
Dive Brief:
Citi’s digital transformation was spurred by compliance lapses stemming from poor data quality.
The Federal Reserve Board and the Office of the Comptroller of the Currency each fined the bank $60.6 million and $75 million, respectively, in July, stating Citi had failed to make sufficient remediation progress following a 2020 enforcement action.
Data overload coupled with technical debt continues to plague the banking industry, according to a recent Publicis Sapient report surveying 1,000 senior bank executives.
While satisfying regulatory requirements was Citi’s initial modernization motivation, simplifying processes and platforms became a broader goal under Fraser, who rose to her current position as CEO in 2021.
“The transformation reverses historic underinvestment in Citi’s infrastructure,” Fraser said Tuesday. “It enhances our risk and control environment and it's a strategic overhaul, as we've talked about, that goes well beyond the consent order to simplify and to strengthen Citi to the benefit of all of the stakeholders we have.”
Among the wins cited by Citi in Q3 were a reduction in data center costs achieved by migrating workloads to private cloud. The company also streamlined public cloud onboarding processes, reducing application migration time “from over seven weeks to two weeks,” Mason said.
Citi saw revenues increase 1% year over year to $20.3 billion in Q3. The company spent $12 billion on technology and retired 390 legacy applications in 2023 as part of the modernization push.
