BankTech

Technology’s role in Jane Fraser’s ascent to CEO at Citigroup

Fraser: "Disruption from tech platforms will happen and happen fast"

Citigroup announced Thursday that its president Jane Fraser would replace Michael Corbat as chief executive in February when he retires after eight years.

The appointment means that Fraser will become the first woman to lead a major financial institution in the United States, according to the New York Times. And not just any financial institution. She will be heading up the country’s third-largest bank.

That news in of itself was enough to have journalists, Twitter and the banking world abuzz. But if you peel back the layer of why such a change is happening right now, it gets even more interesting.

Last month, Citigroup made headlines for an altogether different reason. The bank “accidentally” paid Revlon lenders $900 million in a misfire that still has many perplexed. First, the bank blamed human or clerical error. But then Bloomberg reported that Citigroup had discovered that “archane technology” led to the bank mistakenly sending the $900 million to a fleet of hedge funds that were reluctant to return it. Sources told that Bloomberg that the error culminated with the bank’s decision last year to replace software with the industry-standard – a process that as of August, was not yet complete.

CNBC reported Thursday that a series of events – including the mistake above – led to Corbat moving up his retirement plans by more than 18 months.

According to CNBC’s Hugh Son: “For years, regulators have told Citigroup that its technology systems were subpar. The bank would push back, telling the regulators it was an unfair assessment. But when Citigroup accidentally delivered almost $900 million to lenders of Revlon, the company couldn’t make that argument anymore.”

And apparently, CNBC went on to report, investors, may have been growing impatient with Corbat.

Fraser’s awareness of the importance of technology in the banking industry today was apparent from earlier this year. In January, Fast Company reported that you could count Fraser among the banking executives who had concerns that Big Tech companies are “unquestionably going to have an impact” on the financial services industry.

During a panel discussion at the annual meeting of the World Economic Forum in Davos, Switzerland, Fraser reportedly emphasized that “disruption from tech platforms will happen and happen fast—and how it unfolds will be hard to predict,” according to Fast Company.

We say kudos to Citigroup for recognizing that technology can’t be ignored and for placing a woman in a CEO role. We’ll have more to come on this topic so stay tuned!

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