SINGAPORE: Amid geopolitical tensions and ongoing wars and despite a slowing economy in China, Asia remains a bright spot for the world, Citigroup CEO Jane Fraser said on Friday (Oct 20).
The firm moves US$4 trillion (S$5.5 trillion) – equivalent to the gross domestic product of Germany – every day for 5,000 multinational companies, and much of that flow and activity is in Asia, she said.
“Asia is just the bright spot of the world. There are so many different geographies where the changing dynamics are playing into the longer-term flavour and benefit here, be it what we see in Indonesia and Thailand and Vietnam,” she added.
While China is facing challenges at the moment, the advances the country has made technologically are “extraordinary”, she noted.
There are also several growth opportunities in Singapore, where there are “a lot of different new lanes” coming through, she told CNA. Ms Fraser was in Singapore for a Citigroup board meeting.
“Entrepreneurial clients in this part of the world blow my mind, every time I see them. They’re so innovative, they’re so creative, and that’s going to be enormous wealth creation, but also economic growth creation in the medium- to long-term,” she said.
“I think you can tell I’m an optimist, particularly in this part of the world,” she said.
Outlining the economic situation in other markets, Ms Fraser said that consumer and corporate clients have been in good health in the United States, even as the country heads into a possible recession next year.
Europe has longer-term structural challenges in the labour market and energy prices, she noted.
As she drives Citigroup through its most radical transformation in decades, including simplifying the organisation and cutting jobs, Ms Fraser said it was time to make sure the firm is positioned for the growth that will happen, particularly in Asia.
On the investment banking business in Asia, about 70 per cent of the wallet each year is from first-time issuers or from the firms that are having their first merger and acquisition activity, she said.
Ms Fraser is on a mission to “free up time for our people to focus on clients and to focus on execution, as opposed to some of the more bureaucratic elements that can creep into any organisation”, she said.
The firm plans to remove five layers of management in its restructure, which will flatten the structure and make decision-making faster and easier, she added.
The heads of the bank’s five divisions will report directly to Ms Fraser, and the bank will also cut regional leadership roles outside North America. Job cuts are expected, with managers reviewing employees to determine by November who will stay in place, be reassigned or laid off.
On the need for such large changes, she said: “It was time to really rethink about the strategy, relook at what’s the structure that fits with the bank that we are today, and not the bank that we were and unleash that energy.”
The firm will also focus on changes in culture, she said. Citigroup’s clients expect such improvements, she said.
BEING SELECTIVE OF CLIENTS
During the wide-ranging interview, Ms Fraser also spoke about how the Wall Street giant maintains its regulatory and risk management framework in an era when large banks can sometimes attract bad actors.
Citigroup, which operates in 96 countries, is careful in its selection of clients, she said.
“We put a lot of rigour, and the benefit of being on the ground is that you’re not doing it just (based) off data. You have a good understanding,” she said.
The company has monitoring capabilities to help clients protect against risks or bad actors, via its cyber capabilities and fraud detection, she noted.
“It’s a huge investment that we do, but it does start with being very careful on who we do business with and making sure that we are working with people who are of high reputation and keeping them safe,” Ms Fraser said.
INVESTING IN TECHNOLOGY
Citigroup has been investing heavily in technology and will continue to do so, Ms Fraser said.
“If we think of our transaction services network, which is a critical asset and capability we have here in Asia, we’ve been investing in a lot of cutting-edge capabilities,” she added.
Artificial intelligence (AI), which has the potential to bring about advantages in productivity and customer service, is another area of focus.
“I’m sure we’re going to find thousands of new use cases. We’re trying quite a few of them. But that will enable us to also do more with the investment dollars,” she said.
AI will “enrich people’s jobs”, she added.
“I don’t see it as taking things away, but rather that people are going to be able to do more and do more interesting things because some of the more rote or other elements are going to be able to be done for them,” she told CNA.
She gave the example of how people thought ATM machines would take over the jobs of bank tellers, but the role of the tellers changed.
“We’re going to see that times a thousand-fold with AI capabilities. It’s going to make people’s jobs much more interesting, and I think it will enrich it,” said the CEO.
“It will require training. It is going to require us to learn how to do things differently. But I think we are up for that.”