It’s been about a year since Jayne Opperman took on a Singapore-based role as head of consumer technology for Asia, Europe, the Middle East and Africa. Her mandate: to drive and accelerate the digitalization of Citi’s consumer business across 17 markets (12 in Asia Pacific).
And to do that, she and her team have embarked on a multi-year project to make the bank’s technology stack simpler.
Citi, given its breadth, is trying to use technology to create or improve cross-border scale. The Asia-Pacific region is vast and diverse, traditionally defying global players the economies of scale they crave. Can digitalization change the equation – and can a huge incumbent pull it off?
Opperman says the answer is already yes, citing the group’s fourth-quarter 2018 financial results. Expenses were down 6% year on year, while the bank’s consumer business saw net income increase by 17% for the year.
But she acknowledges the process remains challenging.
From messy to clean
“The difficulties are not about technology,” said the technologist, who has also held chief information officer roles at ANZ and Westpac. She now reports to New York-based Gavin Michael, global head of consumer tech.
Before she joined, the bank had already embarked on a sweeping drive to use APIs – code that links software between different organizations – to connect to partners’ customers. Many of these relationships derived from the corporate and investment banking group, which has longstanding relationships with airlines, retailers, and other consumer-facing businesses. Through APIs, the bank is able to offer its products to third parties’ customers, either under its own brand or on a white-label basis.
At the same time the bank began working with fintechs to improve the customer service for retail banking and credit cards, especially on mobile.
The difficulties are not about technology
Opperman comes in with a mandate to keep adding more features digitally, while putting everything on a platform with standards around data and security.
That requires revamping the layers of apps, programming languages, tools and business logics – the tech stack – to make them simpler and clean. This is not a direction that bank I.T. departments are known for.
But Opperman isn’t looking to banks for inspiration: “It took Amazon five years to do this for its own service stack,” she said.
As the bank addresses these challenges, her focus is on the usual incumbent internal issues; on regulation; and on further innovation.
Challenge one: Incumbent issues
Like its peers, Citi has a lot of legacy – history, processes, systems. Challenger banks and platform technologies lack these problems. Moreover, the biggest budget items still go to maintaining the status quo and to cyber-security.
Maintenance is a huge cost, and fintech is making it harder. New software doesn’t exist in a vacuum. Any change requires multiple systems be checked for accuracy and precision. So the bigger the digital change, the more maintenance required. “It’s a challenge when regression test suites are large,” Opperman said, referring to the scenario testing required every time software undergoes a change.
But Citi is learning how to use new technology to make maintenance easier.
“We’re taking lessons from using external APIs to deploy APIs internally, and using more microservices,” Opperman said. “This de-risks any changes we make, and shortens the timeframe” to test them.
It took Amazon five years to do this for its own service stack
(Microservices, or microservice architecture, structures an application like a collection of loosely related services, rather than as a monolithic, single-focus program. Setting up a tech stack this way enables the continuous deployment of large, complex applications.)
Opperman says the wealth platform has been at the forefront of this style of technology work. Previously, the entire platform – investment reports, product information, research – consisted of vast lines of code in one big system. In such a setup, a traditional regression analysis around, say, onboarding a new partner would take weeks or months.
Now Citi’s divided that into modules that let it test them in isolation. Testing can be cut down to days.
Challenge two: Regulation
The actions of governments and regulators are beyond the control of the tech department, but their decisions create plenty of stresses as well as opportunities.
Digitalization is easier to deploy end-to-end (starting with customer onboarding through execution) in places with digital national identities. Banks such as Citi depend on local infrastructure, such as electronic KYC or faster payment rails.
But even in countries where such things exist, banks can face operational uncertainty: last September, for example, India’s Supreme Court, while upholding the government’s Aadhaar biometric identity scheme, ruled it could not be used by banks or telecom companies to verify I.D.s
Countries such as India have also passed laws requiring citizens’ data be localized, which makes it hard for global institutions to gain scale when it comes to storing or computing that data.
Banks don’t have a ready solution for such roadblocks. “These rulings won’t stop the globalization of data,” Opperman said. She says letting banks and other companies access biometric I.D.s would make it easier for customers to access products or services.
It’s not clear that the arguments over Aadhaar or data localization will impact other countries with digital I.D.s, so Citi isn’t about to reconfigure its global tech stack as a result. “I have to wait and see,” Opperman said.
From local to global
But some government actions are powerful enough that the bank assumes they will have global influence, and can prepare accordingly. Europe’s GDPR standards for data protection, for example, are viewed as leading a trend.
“European Union regulators are clearing putting customer data in customers’ hands,” Opperman said. That means the bank had to amend its systems to meet new requests, such as deleting certain records under Europe’s “right to forget” strictures, or share information via open APIs.
Opperman said Citi expects similar measures are likely in other parts of the world, so it is rolling out these capabilities elsewhere. “It forces us to be disciplined,” she said of GDPR.
Europe’s open API rules have created a new set of challenges, though. A big one involves standards for digital banking and sharing data. SWIFT has worked with its member banks to develop standards with regards to payments, but beyond that, it’s every bank for itself.
“There’s no taxonomy for other parts of data,” Opperman said. For example, open banking has been the law in Britain for 10 years, but there’s not yet an industry standard for in what fields banks report P&L data such as net interest margin. Instead, each bank’s chief technology officer has devised a report.
Such nitty-gritty can make open banking easier, or a nightmare. The result, Opperman says, will be more standards for data.
Challenge three: Innovation
U.S. banks are known for having the biggest tech budgets in the business – but also for centralizing them, with decisions and tech stacks dictated by executives in New York.
Given the size of Citi’s Asia business – it is the largest consumer banking region for the bank – Opperman says the Asia-Pac business enjoys some flexibility.
For example, the bank recognizes that customer experience is furthest advanced in China. “We can test and learn there, and bring something back to [the rest of] Asia and the U.S.,” she said.
The bank is also learning from its fintech partners, especially in Asia. “We’re in discussion” with some big technology names in China, although Opperman would not reveal anything about that.
Working on a better user experience is prompting her team to review the entire tech stack. “What’s the end-to-end customer journey?” she asked. “What steps need to be digitized to make it as simple as possible? And what can we reuse across products?”
A simpler stack
She predicts the bank is headed toward a simpler stack, even as it grapples with Asia’s fragmented markets. “My objective is to build as many features and products on the regional platform so that each market can use and tailor them,” she said, with security and reliability the underlying standard.
She sees other banks also harnessing fintechs to create a broader customer proposition. Citi’s competitive advantage is its breadth. “It’s that last mile into countries, combined with our scale, where we can innovate.”
The bank now has more than two dozen customer-facing API partners. Some of these are complex relationships – she says one service requires 44 APIs to run – whereas others are simple payment channels.