Citi's CEO: Two AI competitions will shape the future of banking.

      TL;DR: Citi's CEO Jane Fraser informed the South China Morning Post that the financial sector is engaged in two AI races: leveraging technology to boost revenue and protecting the financial system from AI-driven fraud and cyber threats. She acknowledged that job displacements are on the horizon, evidenced by Citi's own reduction of 3,500 tech positions in China.

      Fraser emphasized that the financial industry is simultaneously tackling two AI challenges, as she shared with the South China Morning Post. The first challenge involves integrating AI into business operations to drive revenue growth, expedite product development, and enhance customer service.

      The second challenge is defensive in nature. Fraser pointed out that Citi's responsibility is to ensure the safety of the bank, its clients, and the broader financial ecosystem through significant investments, preventing fraud, money laundering, and cyber threats from escalating into serious issues.

      This defensive stance is not merely theoretical; criminals already utilize advanced technology for laundering operations. In particular, deepfakes pose a risk to the trust that underpins the financial sector.

      Citi is directly involved in the ongoing AI expansion. In March, the bank updated its forecast for global AI capital spending from 2026 to 2030 to $8.9 trillion, up from $8 trillion, due to accelerated enterprise adoption and the emergence of agentic systems. According to consultancy McKinsey, agentic advisers are expected to take over many client interactions in retail and private banking. Fraser, however, takes a cautious view of what this means for employees, acknowledging that while “job dislocations” will occur, new roles will also be created.

      Reflecting on her earlier days as an analyst, where she spent time photocopying microfiche and sending faxes to New York, she noted that while jobs evolve, new opportunities arise. She admitted that the shift will not be perfectly synchronized but advised employees to embrace new tools.

      Displacements have already begun, as Citi laid off 3,500 technology staff in Shanghai and Dalian last year as part of a global cost-cutting initiative. Morgan Stanley estimates that AI could potentially eliminate up to 400,000 banking jobs in Europe by 2030.

      Competitors are navigating a similar path, with Starling cutting 130 positions while still recruiting AI engineers. Meanwhile, startups like Taktile, which raised $110 million to implement AI in banking decisions, are contributing to the industry's transformation.

      For years, the financial industry has debated the future of jobs in an AI-driven landscape. The notable shift now is that CEOs are openly addressing the potential job dislocations.

      Fraser believes that the two races have a shared objective. The bank that can grow faster than the emerging threats will ultimately prevail.