A multi-year strategic agreement was announced today by Citigroup, which will see the bank migrate portions of its extensive financial infrastructure to a platform hosted by Google Cloud, an Alphabet subsidiary. Hardware is today a major component of Citi, the fourth-largest bank in America by assets, which is situated in New York. It anticipates that the incorporation into a virtual environment will facilitate the customization of its financial pipes and enable it to adapt to the constantly evolving needs of its customers.
Citi’s head of global IT infrastructure, Balaji Kumar, told Fortune that the bank will also use Google Cloud’s Vertex AI platform to develop various artificial intelligence-based financial solutions for its clients as part of the collaboration. Kumar claims that “quite a few” pilots are already in the works, although it was not made clear which applications may launch first.
“We have a huge opportunity to modernize our technology,” Kumar says. The infrastructure improvement is a component of a broader initiative at Citi to better leverage the bank’s financial pipelines, which account for half of the bank’s income and drive a significant portion of the world economy.
Google Cloud’s engineering, product, and sales teams have been collaborating with Citi’s technology and business enablement team for months, and a large portion of the technology they have co-developed is fairly advanced, according to Rohit Bhat, managing director of Google Cloud’s financial services division, even though the partnership is still in its early stages.
A high-performance computing (HPC) capacity that will execute millions of risk calculations daily for Citi’s Markets unit is the most significant of the Google Cloud enhancements at Citi. By proactively verifying that transactions have sufficient processing power and storage to complete, the program is supposed to lower latency or delays.
Vertex AI, the enterprise version of Google’s proprietary Gemini AI, and other open-source large language models (LLMs), such as Gemma, Meta, and Mistral, are also available to Citi through the agreement. The bank plans to use the AI tool in the future to finish additional pilot projects that are presently underway, such as those for call centers and customer support, document digitization, and tailored marketing tools.
When cloud and AI tools are used, new security issues arise, such as who can access the data and where it originates. According to Kumar, “every use case is governed and monitored and approved” prior to being made available to the general public in order to allay those worries. This entails a thorough examination of the type of data being utilized, its hosting location, and whether it is being actively used or kept for later use.
According to Bhat of Google, “We’re starting with the modernization platform really focused around reducing risk.” “That serves as the basis for some of the more creative things we’re creating, like new goods and services and improving the overall customer experience for the company.”
Placement strategy
The collaboration is a component of Citi CEO Jane Fraser’s broader initiative to draw attention to the economic impact of its financial infrastructure. According to reports, Fraser restructured the company’s business divisions last year to highlight the significance of the bank’s custody and treasury services in international finance.
According to Kumar of Citi, “a simplified operating model will be the end state.” “The ability to meet customers where they are and launch products at scale is something that our CEO and our executives have discussed a lot.”
Citi’s larger AI plan includes this collaboration as well. According to a widely reported Citi analysis from June, artificial intelligence was poised to replace 56% of banking employment. To enhance commercial lending analysis, the bank made a strategic investment in Numerated, a commercial lending AI firm, four days after the report was released.
Today, Citi’s stock rose 1%. The company’s shares have risen 15% so far this year, while the S&P U.S. The Banks Index has seen a 26% increase at other U.S. banks during the same time frame.
Citi is strategically positioned differently than some of its rivals thanks to its connection with Google. The Wall Street Journal revealed that Goldman Sachs had implemented its own generative AI tool the same month Citi invested in Numerated. In August, Fortune exclusively revealed that 14,000 BNY employees were utilizing Eliza, a new AI named after Alexander Hamilton’s wife.
An Alphabet subsidiary and Citi have previously collaborated. The digital checking service GooglePlex was discontinued the next year, but Citi announced in November 2020 that it would partner with Google to offer a checking account utilizing GooglePlex.
The Citi agreement is part of Google Cloud’s ongoing efforts to support financial institutions’ adoption of AI. Most notably, Google Cloud collaborated with Discover Financial Services, the parent company of Discover Bank and the Discover credit card, in April to assist in incorporating its AI into customer support.
According to Google’s Bhat, “we think there is a material step function change in the ability for firms to understand the information that lives between their four walls,” enhance the client experience for their customers, and grant developers the ability to create entirely new experiences for their clients. Machine learning and generative AI are combined to create that step function change.
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