Fintech on Friday: Citi sees no need for warp speed on digital journey
While many private banks like to give the impression they are involved in breakneck digitalisation, the movement at Citi appears to be one of more gradual change, but with a human face.
The US bank may have started its transformation way before many competitors, but according to Emea CEO Luigi Pigorini, there is no rush to progress to a full, machine-led offering.
“We probably add 100 to 120 new family clients each year, which is a tiny number compared to our competitors, who get thousands,” says Mr Pigorini, emphasising the more niche nature of Ciit's target market of large, influential clients. “The majority of them want to deal with the bank, face to face.”
Even though many will use Citi’s digital platforms to trade, direct, one-to-one contact with relationship managers is actually increasing, he says, with clients seeking “real, personal advice”. The wealthiest clients, says Mr Pigorini, are typically multi-banked and will always compare the experience they enjoy digitally from various wealth managers. He is happy as long as Citi maintains a place among the top three players.
The client experience, according to Citi, must embrace products, advice and channels of communication, both digital and personal.
“You can be an extremely digitally-focused provider, offering clients the best customer experience, paperless, with online docu-signing facilities, but we still get clients who want to sign a piece of paper, photocopy it and keep it in the vault.” He estimates that up to 50 per cent of ultra high net worth clients prefer this manual service.
Digitalisation clearly has its limits. It is yet to embrace less liquid classes such as private equity and real estate at Citi, although work to tokenise these investments, using blockchain, is currently in progress.
“We will be able to offer that eventually, but the industry we compete in is still a few years away from this,” suggests Mr Pigorini, with banks yet to negotiate the challenges of how to do due diligence on these assets, make sure they are correctly regulated and guarantee a certain level of returns to digital customers.
Eye to eye
Like other competitors, Citi has been busy creating communities of clients, who can share information and co-invest together, but unlike some rival firms, there is still an insistence at the helm of this ultra-conservative player that the wealthy families must meet or at least conduct video conferences and look each other in the eyes before they choose to invest.
“A lot of the distribution of information happens online,” says Mr Pigorini. “But meetings are either physical or by video.” Virtual co-investments “are looming” but it will take a few years before the bank is ready to bite the bullet.
Where Citi is perhaps beating some others, is in its institutional-level technology, allowing relationship managers to use big data to vet portfolios for their adherence to weightings recommended by its portfolio experts.
Citi is now taking this technology, pioneered within the private bank, and leveraging it across the bank division serving institutional clients.
This culture of digital innovation, now expected by clients, must come from the very top of the organisation, believes Mr Pigorini, and while the younger generation of employees always “get it”, it can be the case that older relationship managers need to be steered towards a more digital way of thinking and working.
“We have to constantly push our managers – particularly the middle-aged ones – to adapt to a digital way of life,” says Mr Pigorini smiling, acknowledging that those grey-haired long-termers in their fifties, such as himself, do not necessarily adapt readily to the new reality. “If you don’t push it, most of them won’t do it, as they are outside their comfort zone.”
The secret of succeeding in this innovation comes from trusting the knowledge, experience and long-standing client relationships of the older managers, while persuading them that they can further extend the client experience and expand the client book by embracing digital channels.
“Our RMs understand they get huge value from speaking to the younger, digitally-focused people in our teams,” he says.
It is also important, says Mr Pigorini, to integrate the operations staff in the bank’s “centres of excellence”, to make sure they are working closely with RMs and investment staff. Many of these back office staff are based in locations including Warsaw, Budapest, Dublin and Belfast. Much of the technical support is carried out in these centres, using economies of scale, at a fraction of the cost of operations in London or Dubai.
“It is vital to show your face there, to tell them they are important, so they don’t become detached from the business. Communication between your team in London, Western Europe or Eastern Europe, with the service centre or offshoring platform, must always remain a key priority.”
