Dive Brief:
- Citigroup redoubled infrastructure modernization efforts to fix data quality management failings, CEO Jane Fraser said during the bank’s Q2 2024 earnings call Friday.
- The announcement comes two days after the Federal Reserve Board and the Office of the Comptroller of the Currency fined the bank $60.6 million and $75 million, respectively, for violating a 2020 consent order. “Citigroup has made insufficient progress remediating its problems with data quality management,” the Fed said in a Wednesday Statement.
- “Our transformation is addressing decades of underinvestment in large parts of Citi’s infrastructure and in our risk and control environment,” Fraser said, pointing to “fragmented tech platforms” and process inefficiencies. “This is a massive body of work that goes well beyond the consent order … this is not old Citi putting in Band-Aids — this is Citi tackling the root issues head on.”
Dive Brief:
Fraser has been beating the digital transformation drum since rising to the chief executive position in March 2021.
The company invested more than $12 billion in technology last year and entered the home stretch of a six-month organizational simplification push in March.
As the financial sector looks to generative AI for process improvements, Fraser welcomed former PwC senior partner Tim Ryan to the bank’s technology leadership team last month. As head of technology and business enablement he will help drive the bank’s digital strategy.
“The tech investments we have made are making a difference," Fraser said Friday. "We have reduced the time it takes to book loans, automated controls for our traders to reduce errors, moved risk and analytics to a cloud-based infrastructure and increased the resiliency of our platforms to reduce downtime.”
The company’s ongoing regulatory woes illustrate the deep connections between the tech stack, data estates and compliance management in modern banking. Citi is leaning on IT investments to streamline data operations, automate processes and controls and improve operating efficiency, according to CFO Mark Mason.
“We will continue to invest in the transformation and technology to modernize our operations and risk and control infrastructure,” Mason said Friday. “That said, we have fallen short in data quality management, particularly related to regulatory reporting, which we've acknowledged publicly since the beginning of the year.”
Mason also detailed some of the bank’s simplification wins, including data center closures and platform reductions.
“The reality is we spent about $3 billion last year on transformation related work and the plan is for us to spend a little bit more than that this year,” Mason said. “As we work through the transformation and some of the things that Jane and I mentioned earlier, like data related to regulatory reporting, we've had to spend more than we had planned.”
Citi reported $20.1 billion in revenue for the three month period ending June 30, an increase of 4% year over year. The bank’s expenses were $13.4 billion, down 2% compared to Q2 2023. Mason attributed the decrease to savings from organizational simplification, offset in part by the Fed and OCC penalties and continued transformation costs.
