Citi CFO: Data Standards Continue to Evolve, System Upgrade Complexity Rises

Citigroup (Citi) is still working through long-standing data quality issues that have drawn regulatory scrutiny and led to multiple fines this year. But the bank's Chief Financial Officer Mark Mason said Tuesday that data improvements are not a challenge unique to the New York-based bank.

"I think the need to improve data, as it relates to regulatory reporting, is also an industry-wide dynamic," Mason said at theGoldman Sachs Financial Services Conferencein New York. "And even as we are going through our transformation, that standard continues to evolve, which adds additional complexity that we can't ignore."

Mason said Citi has been working to address data, risk, and control deficiencies identified by regulators, while also advancing broader operational reforms across the company. He reiterated that this is a multi-year effort. The bank invested$12.2 billion。

Regulators fined the bank$135.6 millionin July, while the Office of the Comptroller of the Currency (OCC) provided "feedback" on the bank's technology modernization efforts. Mason noted that agencies, while acknowledging progress in data and regulatory reporting improvements, also criticized Citi fornot having made the expected progress in this work。

Mason said Citi grew through multiple acquisitions over the years but never fully integrated systems, operations, and technology to the level it should have. "That makes the transformation task ahead of us more formidable," he said.

Mason emphasized that the bank's data issues primarily involve regulatory reporting, which is distinct from Citi's customer, client, and financial reporting data, about which he feels "very good."

"The work we need to do is mainly around: how do we improve the timeliness and accuracy of regulatory reporting?" he said. "And we all have to comply with thousands of regulatory reporting requirements."

Since the July fine—which supplemented two enforcement actions taken against Citi by the Federal Reserve and the OCC inOctober 2020—the bank has been reviewing its approach to regulatory reporting data processing, "and we are adjusting that approach," Mason said.

One example: "We are moving from a product-oriented approach—how do we improve data, how do we capture data, how do we control data—to a report-oriented approach," he said. "Given the requirement is to improve the output of these reports, ensuring that the capture of key data elements is oriented toward reporting requirements is a significant shift."

More broadly, Mason said Citi has also made progress in stress testing, risk controls, and platforms supporting payments and markets.

The bank still expects full-year expenses to be close to $53.8 billion, "and we are still working to determine whether we can cover civil fines," Mason said.

Mason defended the bank's spending this year, pointing to the need for increased investment in transformation and risk control efforts. "We have been very disciplined in managing the overall expense pool, and we have been looking for additional productivity opportunities to offset some of the increases that have occurred during the year," he added.

Mason expects 2025 to be another year focused on transformation execution, which executives have said is their top priority.

Chief Executive Officer Jane Fraser has said the bank is committed to investing the necessary funds to resolve the consent order issues. Regarding regulatory feedback and spending, "when we fall behind in an area, we increase the required investment," and learn lessons,Fraser said in October。

Citi expects investment banking fees to rise 25% to 30% year-over-year when it reports earnings in January. Mason attributed this to strong performance in mergers and acquisitions, equity, and debt capital markets. After bringing inJPMorganVis Raghavan and strengthening hiring, the bank's market share in this area has continued to grow.