NEW YORK -- Citigroup sees digital technology as not only a cost cutter but also a way to deliver customers more convenience, but the U.S. banking giant is not grasping at every innovation, CEO Michael Corbat told The Nikkei in a recent interview.
Take bitcoin, for instance. Corbat acknowledged the value of the blockchain technology that underpins bitcoin, but said he was not interested in the cryptocurrency itself.
Excerpts from the interview follow.
Q: Technology is very effective for cutting costs. However, the most important question is how can technology and digital boost top-line growth.
A: Technology and data boost top-line growth. The more satisfied your customers and clients are with what you do, the more likely they are to use your products and your services.
When we look at the major streams from a consumer perspective -- savings, borrowing, protecting, spending, and investing -- each of those has a technology aspect to it. Right? In saving, it's remote deposit capture. Today you actually don't have to go to the bank. You take a picture of the check, it gets deposited into your account. We've just taken friction out of your life.
[Next is] borrowing. In Asia, ... we tested and now are using at full scale [a service in which] when you actually go and buy something ... we give you the option: Do you actually want to put that on your credit card, or would you like a loan? And we instantly send you a message that says 24 months, 36 months, 48 months, here's the interest rate, here's what your payment is, click here, and you're approved.
All of those things drive satisfaction, they drive more usage, and the great news is, they're typically cheaper to deliver.
Q: You have a lot of big data. And the most important part is analyzing and making use of it. Do you already have enough human resources for that? How do you plan to compete with Google and Amazon.com in terms of human resources?
A: We run a big technology firm.
We are developing [technologies] at our own innovation laboratories [around the world].
[And] we partner with technology firms.
The biggest challenge fintech firms have is becoming scalable. We have the ability to take a startup and give it credibility and scale. What we find is that a lot of these firms come to us and want to partner with us.
There's a number of firms that are just far better at developing technology than we are, and we acknowledge that ... and we are happy to buy their services.
Three or four years ago I would go to Silicon Valley and some 20-something would sit across from me and say: "We're coming after you and your business model." Today, while I don't dismiss any of that, the conversations are much more: "We want to partner with you. We want to be a key provider of our services to Citi."
Q: In an interview with CNBC, you said: "Three, four, five years from now, we are not going to be talking about the credit cards, we're just going to be talking about digital payments." Please tell me if you still have the same ideas.
A: I say to our credit card people, when you think of what payments has to be, it has to be faster than [mimes swiping a card]. The key to the future is not so much around data protection, as it is authentication. And how do we actually authenticate it's you in a passive way? Biometrics ... face, walk, thumbprint, eye scan, voice. ... Multifactor passive identification I think is where things are going.
And so when I say that credit cards are going away, I'm referring to the physical plastic.
Q: Can you please talk about bitcoin? JPMorgan Chase CEO Jamie Dimon said it's a kind of fraud. But Goldman Sachs is now exploring the bitcoin business. As CEO of Citigroup, do you think bitcoin will become more widespread?
A: I'm never dismissive of new things. But like many new things, its original application may not or likely won't be the end state. When we look at bitcoin, we all think and believe that the underlying blockchain technology [is] very valuable. When I look at bitcoin itself, I struggle a bit. What is it? Is it a currency? I don't necessarily think it is. Is it a speculative investment? Probably more so.
And if you actually look at some of the primary uses of bitcoin, it's tax evasion, it's money laundering.
So again, I'm not dismissive of it at all, but as a prolific currency, I don't see that in today's form.
Q: As an institution, how do you approach it?
A: We're not involved in it. Very interested in the technology, not interested in the instrument.
--Interviewed by Nikkei staff writer Akira Yamashita