Discover your dream Career
For Recruiters

Corbat's Tech Move at Citi Puts Business in Charge of IT

There’s an increasing tendency for those working outside banks’ IT departments to take overall responsibility for tech functions. What are the implications for rank-and-file technologists?

When Citi announced its management shake-up this week, it also revealed that Jamie Forese and Manuel Medina-Mora, who were appointed as heads of the bank’s institutional and consumer businesses respectively, would assume responsibility for operations and technology, while “working closely” with current head of ops and technology, Dan Callahan.

“This change will better align the priorities and strengthen accountability between our client-facing businesses and their support function as we continue our efforts to become a fully digital bank and improve efficiency through the organization,” said CEO Michael Corbat said in a memo to employees.

Citi has already been running technology as a centralised function, and closely managing expenses – as the 3,430 job cuts in operations and IT announced in December demonstrate. However, the move is more about key executives having an input into technology that gives the bank a competitive edge, says David Easthope, research director, securities and investment at consultancy Celent.

“Going forward, shared infrastructure will be managed centrally but client facing will not,” he says. “The keyword here is client facing. It makes sense, in a digital economy, for business managers to manage or at least have greater input into client facing technology that support their clients.”

The evolution of the senior ranks

An increasing amount of banks’ tech budgets are being decided outside of the IT department. A recent survey by Gartner suggested that 20% of IT spending was initiated by those with no direct connection to technology functions. This means a more intrusive approach, says Chris Pickles, head of industry initiatives, global banking and markets at BT.

“When senior management has personal responsibility, and indeed liability, about for technology you can expect more questions to be asked and budgets to be decidedly tighter,” he says.

The role of the CIO needs to combine business acumen with a deep IT knowledge, but increasingly investment banks are looking to hire more hands on senior technologists, suggests Paul Bennie, managing director of IT in finance headhunters Bennie MacLean.

“Increasingly, there’s a manager taking a quasi-COO position overseeing stacks of IT, while more senior technologists are recruited to roll up their sleeves and get directly involved in projects,” he says.

“Very often these days we see a split between CIOs who provide a lot of the business-technology interface (namely, the planning and direction) and CTOs who have to deliver the actual capability and projects,” adds Peter Redshaw, managing vice president within Gartner’s banking and investment services research team.

The cascading effect to the rank-and-file

With the business now taking a keener interest in IT functions, it’s naïve to assume that things won’t change for technologists lower down the ranks. Redshaw says that banks will increasingly recruit people with “hybrid” skills of technology and business knowledge. More importantly, though, in an era of increasing automation, they’re going to have to add value.

“Employees will be needed to optimise and improve operations rather than executing operations,” says Redshaw. “Machines are usually better at running things as they don’t get bored and they stick to the rules. People are better at designing the new algorithms and workflows that will improve decision making or speed up processes.”

If you’re working on a system on the front line, expect more scrutiny of your work. “The implication for technologists is client facing tech cannot be built in a bubble away from the business,” says Easthope.

Citi’s announcement that it was “managing expenses” within its tech functions haven’t worked out well for IT professionals in the organization. However, cost-cutting doesn’t always sound a death knell for in-house employees.

Barclays, for instance, has cut the cost of developing IT systems by 90% through building its own internal cloud (rather than using the services of tech vendors). It’s taken the decision to build everything in-house to cut down on annual license payments.

AUTHORPaul Clarke
  • Gl
    9 January 2013

    Corbat is a smart man. Citi has been overspending on technology in the last decade. The IT budget has been bloated and now the business will finally see the entire P&L, not just the revenue side. Good move.

Apply for jobs

Find thousands of jobs in financial services and technology by signing up to eFinancialCareers today.

Boost your career

Find thousands of job opportunities by signing up to eFinancialCareers today.
Latest Jobs
DevOps Engineer
London, United Kingdom
Chef de Projet Data
Le Plessis-Robinson, France
Remittances Supervisor AVP
London, United Kingdom
Fed Finance Banque de Marché
Chargé de Middle Office - AM F/H
Fed Finance Banque de Marché
Paris, France
Legal & General
Reconciliations Analyst
Legal & General
London, United Kingdom