Dive Brief:
- Citigroup aims to hire 2,500 programmers this year in its institutional clients group (ICG), which includes its traders and investment bankers.
- The nation's third-largest bank is looking to keep pace with Goldman Sachs and JPMorgan Chase, which have each moved to bolster their coding force in the past six months.
- Advancements in technology will help Citigroup save $600 million in 2020, the bank estimated. The bank allocates about $8.5 billion per year, or 20% of its expenses, toward technology. It already employs 23,000 technology specialists in its ICG.
Dive Insight:
Data scientists will take up more seats and accumulate more clout on trading desks this year, according to a study published Monday by data analytics firm Greenwich Associates.
"One could argue that most, if not all, of the market’s evolution over the past decade has come because of access to data and the ability to put it to work,” Kevin McPartland, head of research in the company's market structure and technology group, said in the study. "So it should come as no surprise that experts in that field are taking over."
Citi's announcement comes about a month after an Accenture study found that automation can save North American banks $71 billion by 2025. But along with the savings come fears technology will also cost jobs — 200,000 in the next decade, according to an estimate by Wells Fargo Securities.
Citi is far from alone in its focus on technology. Upgrades and a boost in tech spend are high priorities for Bank of New York Mellon. "It's not about robots replacing people, and it’s not about people fighting with the machines. It’s them working together as artificial intelligence plus human intelligence," said Roman Regelman, the bank’s senior executive vice president and head of digital. "When they work together, we have something very different that fundamentally unlocks something neither can do."
About 75% of Citi's trade orders were electronic last year, said Stuart Riley, global head of operations and technology for the bank's ICG. The programming hires reflect "what we are building in technology and why we are focused on making salespeople and traders more effective at servicing our clients," Riley told Bloomberg. "Technology is augmenting what humans do by making better use of data."
Other banks are also using coders to boost their capabilities in trading. Goldman Sachs announced in August that it was hiring 100 engineers in tech-related roles on the trading floor. Meanwhile, two JPMorgan Chase coders received regulatory approval in October to trade cash equities. Eight more were expected to get their licenses by the end of 2019.
"The delineation between traders and technologists in markets is disappearing," Riley said.
Citi's $8.5 billion 2020 tech budget is slightly less than its biggest competitors. JPMorgan is on track to spend $11 billion on technology this year, while Bank of America has said it spends about $10 billion on tech, with about $3 billion going to new projects.
Citi may face stiff competition from tech companies, particularly in the New York market, in its effort to hire coding talent. Facebook is planning to hire more than 3,000 people over the next three to five years in New York, while Amazon has announced plans to lease space in Manhattan for 1,500 workers.
Citi's effort may serve as an early net positive in terms of headcount this year. The bank said last July that it would cut hundreds of jobs across its stock-trading and fixed-income operations. They were among nearly 78,000 banking jobs that were reportedly cut last year worldwide, although the vast majority of those were in Europe.
Bank of America also looks to be bulking up. The bank added 3,600 employees last year, CEO Brian Moynihan said in a memo to staff Friday, citing the bank's technology initiatives, Bloomberg reported.
