Given the pandemic-induced market disturbances, some of the biggest banking conglomerates in the United States have declared the need to revamp their systems. They also aim to improve offers to clients online. Citigroup has declared that they plan to hire 4000 new tech staff for this purpose.
By comparing new policies from Citigroup, JPMorgan Chase & Co., and others, we can deduce 3 main goals of the new changes:
- Improve company agility and disaster response
- Move institutional clients to digital services
- Modernize technology
Jonathan Lofthouse, the head of markets and enterprise risk technology at Citi, also spoke to Bloomberg. He disclosed that one thousand new applicants will join his team as part of the new policy.
The company hopes to jolt itself into modernization with this move. It also aspires to keep track of the digital field, and come to the forefront of online banking and financial services.
Banking Systems at a Disadvantage
The banking sector has a major position in the quaternary industries and implicit access to finance. As a result, it has been dominant within the economy for centuries. This has allowed the companies to grow steadily and acquire new assets regularly. They did not depend on the level of their technological advancement or the advances in services.
Additionally, the market has had high regulation and a high price of entry. Consequently, large financial corporations like Citigroup have reigned unopposed for almost the entirety of the 20th century. In turn, this has led to the relative stagnation of their business models. It also created severe unpreparedness for global disaster situations.
For banks in the United States, the additional issue is the rise of other financing methods, including cryptocurrency. These paradigms have given preference to strictly online options, as well as new modes of doing business such as remote working. These behemoths of the industry were clearly not prepared for these changes.
Now, the companies need to shake up and quickly reach the current financial industry standards. This doesn’t only include services included with online banking. Rather, it includes fintech solutions, as well as cybersecurity.
Revamping Old Technologies
Lofthouse described this issue and explained why Citi is trying to hire so many people at once. He said that the company is trying to switch as many aspects of the client’s experience to the digital platform as possible. This includes what they can see in the front end and what is happening in the back end.
He explained that the technology most financial giants are using is, on average, more than a decade old. That means it is completely incompatible with modern business. Those who understand that on time can digitalize first. Then, they will have a significant advantage over their competitors.
Citigroup’s CFO, Mark Mason, recently stated that they will increase spending for tech purposes by 10%, which has reached $10 billion in 2021. This should achieve a multi-fold effect. For one, it will protect the security and experience of the customers. It will also increase the appeal of new users to switch to the old financial companies.
Namely, back in February, multiple US officials, including President Joe Biden, sent out dire warnings about the increased risk of Russian hacking of US financial institutions. Top brass from both JPMorgan Chase and Citigroup were present at that meeting.
Additionally, the risk of renewed lockdowns has affected these companies significantly. Many of the companies’ institutional clients could not adapt to digital services. This has left the company in gridlock while the worst of the lockdowns were in force.
Lofthouse believes Citigroup should adapt to new business models followed by companies in the financial sector. In fact, by following these paradigms, some companies maintained and improved their performance, even during the pandemic. As a result, Citigroup can silence these issues by following their footsteps.
Calling All Data Managers
Currently, Citi employs more than 30,000 software engineers in various fields. They hope to increase that number by over 10%. Citigroup also aims to increase the productivity and agility of current talent by operating with new business models, such as working from home.
Lofthouse clarified, “We’ve always seen the tech market to be competitive. Yet, particularly at the moment, coming out of the pandemic, we’ve seen a digital explosion across industries.”
However, this move brings a new issue with it. Data managers and analysts, as well as other tech fields, have been increasingly hard to find. This also applies to cybersecurity analysts and experts who are also wanted by Citi.
Judging by the lay of the land, the company will need to focus on recruiting. Additionally, it should possibly be looking for talent internationally. Finally, Citigroup may also have to train new specialists internally. This might be a harder task than imagined for Citi, as the company has seen a rise in employee turnover during the last two years.
Eventually, this will also increase the cost per software tech. This group is actually the only one in the last two years who have seen their income rise more than the inflation, not counting the company heads and the shareholders.
Prepared for New Business Models
With the new changes, finance giants like Citigroup will need to predict new business models. They will need to possibly adapt to a new pandemic, and consider the affinities of the new worker market. At least for some of the jobs offered, the employee may need to carry out their responsibility from home.
Preventing people from working from home has led to massive resignations. Experts even dub the phenomenon as the great resignation. This happened because companies did not provide benefits like telecommuting.
Citigroup will also need to adapt to the new model. They may also need to pay a premium for any talent, especially top talent. Why? Because the housing and consumer prices are rising, and specialized leaders are becoming hard to find.
Aside from remote working, companies may also need to follow in the European countries’ footsteps. They should offer benefits relating to a work-life balance. Regretfully for the lender, talent they need has an advantage when it comes to negotiating. The company can only adapt.
