How Citibank, BofA, and JP Morgan Chase Sets Examples in Digital Transformation - COREDO

How Citibank, BofA, and JP Morgan Chase Sets Examples in Digital Transformation

Updated: 27.02.2023

Maintaining the cutting edge of technology requires knowledge and abilities beyond the technology teams. It helps to have participants from different business lines participate in the development process, as well as those who left banks for fintech and wish to return. A good question to ask yourself: is your transformation journey hindered by an approach focused solely on technology?

How Citibank, BofA, and JP Morgan Chase Sets Examples in Digital TransformationToday’s banking sector demands agile development of innovative financial products as well as advances in concept and design. According to a Bank of America executive, the fact that “rapid agile” is giving way to “hyper agile” in the planning process at the megabanks, is a sign of the growing urgency.

The change can be seen in how these banks are increasingly taking the lead in the development process in novel ways, with lines of business playing a more critical role than in the past, to reduce the time it takes from identifying a market need to meeting it.

For instance, at Bank of America (BofA), innovation and development projects have been pushed way down to different business organisations, with employees from different functions joining the pool of potential developers.

At JP Morgan Chase, Roman Eisenberg, managing director and the company’s head of technology for digital banking, mentioned that “controlled autonomy” is the bank’s development mantra. With this strategy, lines of business can independently develop their own technologies and fast bring them to market.

Hari Gopalkrishnan, current managing director and head of retail, preferred, small business, and wealth technology at Bank of America believes that a “hyper agile” transformation approach will be the norm of banking in the near future. In this state, he mentioned that anybody in the company could initiate and work on an idea, be able to propose it, test a proof of concept, and integrate that into a business roadmap.

According to Nick Nadgauda, managing director and Global Head of Technology for Citibank’s Treasury and Trade Solutions, the evolving perspective on how and where technological progress should emerge corresponds to the nature of the banking industry itself. He claims that giant financial institutions are highly regulated powerhouses. Given this, they have a closer relationship with nonbank businesses thanks to embedded banking and other new technologies. Offering payment services for a ride-sharing or food delivery app may also involve managing the payment for the gig workers who deliver or drive.

Nick Nadgauda highlighted that this is the seeding point on where the banking industry’s growth was rooted in the past few years, pointing out that it heavily contributes to the pressure banks experience to match the development speed that fintech can provide.

Last December 2022, the three bank executives (Citibank, Bank of America, and JPMorgan Chase) participated in the Tearsheet’s end-of-the-year celebration called The Big Bank Theory Conference. This conference highlighted the exploration of the changing face of the financial institution by bringing the industry’s top decision and opinion-makers to one virtual space. This is where the leading banks, credit unions, challenger banks, and payment firms come to wrap up the past year and get inspired and educated toward the coming year.

How JPMorgan Chase Democraties Tech Development

During the Big Bank Theory Conference, Roman Eisenberg from JPMorgan Chase spoke extensively on its mobile and web applications, which are utilised by more than 60 million customers, and how there were 20 million to 35 million active sessions each day. According to Eisenberg, this includes an “ecosystem” comprising more than 100 items and services, all of which must be able to cooperate. He mentioned that the company’s objective is to provide its consumers with accessible, quick, secure, always-available experiences that fit in the palm of their hands from a complex and risk-averse ecosystem.

How Citibank, BofA, and JP Morgan Chase Sets Examples in Digital TransformationEisenberg highlighted that the company assesses its technological processes in how the consumers utilise them rather than how the company is organised. He mentioned that the ultimate guiding principle that JPMorgan Chase follows for technological advancement is to focus that business on its products.

Usually, the IT department has been a major roadblock for business units trying to launch a new product or thwart a competitor’s strategy. However, this trend dates back decades.

Eisenberg claims that his department’s digital technology unit is aware of the need to avoid becoming a “bottleneck,” as he puts it, that delays necessary reform.

He says that with “controlled autonomy”, the company’s technological mantra, office staff can initiate innovations independently. They do not have to wait for any actions from the digital technology team to do things and move into action. This is necessary due to the demand and pressure to innovate processes and change banking procedures.

“Controlled autonomy” refers to the ability of lines of business to create and deploy new functions and services tailored to their niche markets that integrate with Chase’s whole IT infrastructure. It is a mindset that enables the units to independently launch the most recent iterations of these technologies.

However, setting up technological requirements to be met is necessary to make that happen without producing disruption.

According to Eisenberg, the standards contain a testing approach to ensure the new procedures and services function properly. This expedites the release of software without sacrificing its quality or availability.

To understand the challenge, consider that Chase has 400 engineers for consumer banking products alone, many working independently, across 95 teams. Eisenberg highlighted that this is how the bank can update and add to its mobile capabilities every two weeks, enabling process continuity.

It takes much experimenting, frequently with live experiments, to make new ideas work. According to Eisenberg, these are constructed, employing practices like A/B tests, to give concepts a respectable live tryout. These studies allow the company to swiftly identify ineffective features and roll them back, he added.

Why Bank of America Developed the Erica Chatbot

According to Bank of America’s Hari Gopalkrishnan, the concept of “omnichannel” must be redefined. Today, it has come to mean that, depending on the consumer’s needs, a transaction initiated in one channel, such as online banking, can be easily resumed later whether online or in a branch. Gopalkrishnan believes this is out of date. Customers are no longer drawn to branches as frequently as they formerly were by online functionality friction. Processes can therefore be managed entirely digitally or in a hybrid way.

He mentioned that although consumers could view human interaction as the default option, there is no reason why it can’t be seamless. Because of this, “Erica”, Bank of America’s natural language chatbot, was made to enable the entry of a human agent into a transaction when necessary, but also to enable the return of the consumer to the chatbot dialogue following their intervention. This is comparable to having a live supervisor step in to answer a call centre employee’s query before leaving to let the employee continue speaking with the customer.

Gopalkrishnan claims that Erica is advancing beyond routine banking to help clients with more challenging activities, such as responding to inquiries about things like individual retirement accounts.

He highlighted that every BofA department now has a role in digital transformation. More broadly, seeking out innovation inputs across the company has become increasingly important in developing this capability and the other technological advancements he described.

In Gopalkrishnan’s own words: “We don’t have a set of people sitting in an office in Palo Alto who are the smart people who come up with all the ideas and then tell everybody else what to do.”

He added that BofA holds many patents on concepts rooted outside its technical departments. He claims that the bank conducts “sprint cycles” every quarter, involving up to 1,500 employees globally. In this program, each team has 48 hours to develop an idea and a vote session determines which of the more than 100 addressed have the greatest promise for viability and return on investment.

BofA understood that having technologists alone poses the risk of leaving out crucial components of the process under review, thus participation was expanded. Gopalkrishnan believes that commercialising an idea means including everybody else.

How Citibank Benefits from Fintech Crash

Many financial institutions, both large and small, have found that fintech alliances are essential to their efforts at innovation. Previously, innovation groups inside Citibank’s divisions were responsible for identifying collaboration possibilities and locating the best companies to engage with.

How Citibank, BofA, and JP Morgan Chase Sets Examples in Digital TransformationHowever, as highlighted by Nadgauda, Fintech collaborations lack many breadths, although they have worked to a certain extent.

As a result, Citibank ensures that these initiatives will involve employees from relevant business lines. This process allows the company to produce more innovative ideas and increase exposure to more new partners.

Producing cross-pollination is another concern that most Fintech companies face challenges. Nadgauda claims that many former workers of Citiank are starting to return to the company after being let off from the fintech employment they had previously departed for.

“They’re saying, ‘It looked good. I took a chance. It didn’t work out. Can I come back?’” says Nadgauda. He mentioned that this has been happening for many of their employees and that the company created a special program branding them “returners”.

Nadgauda believes that for many reasons, returning employees from fintech companies are beneficial to the company. “You get people who know the institution, but they now have a little bit of a different perspective and they can bring that perspective with them when they come back”, he added.



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