Banks are spending billions on upgrading technology and Citi's CEO revealed just how much
- Citigroup is dedicating roughly 20% of its expense budget to technology, according to CEO Michael Corbat.
- That works out to around $8 billion in 2018.
- "We're spending more this year than last year in an effort to spend less next year," Corbat said.
Citigroup is spending around $8 billion to bolster its technology capabilities in 2018.
About 20% of the bank's expense budget is now dedicated to technology spend, CEO Michael Corbat said Wednesday at the Bernstein Strategic Decisions Conference.
Corbat said he expects this will result in technology cost reductions in the next two years as old-school, analog processes are put out to pasture.
"That scale of investment, which is very significant, is the right level of investment today," Corbat said. "We're spending more this year than last year in an effort to spend less next year."The bank hasn't previously announced the percentage of expenses put toward technology, but Corbat said that the 2018 tech spend is an increase from the year prior.
In 2017, Citigroup had $41.2 billion in total operating expenses, according to its most recent annual report. Assuming the bank has roughly the same amount of operating expenses in 2018, as analysts have projected, 20% of that figure works out to $8.25 billion.
By comparison, JPMorgan has an annual tech spend of $10.8 billion.
Corbat explained that in many instances the bank is running parallel systems as its technology investments are built, tested, and brought up to speed - an analog system alongside a digital system.
In the next couple years, he said, that will result in cost savings as the digital technology replaces the analog systems.
"We expect a lot of those analog costs to fall away in the next two years," Corbat said.