Thank you, Jen. Thank you, Mike. Welcome. Thank you E. It's great to be here. And thank you everybody for sticking with us for what has been such an exciting time. We've proven over the past two days that it's an exciting time in the banking and financial services industry. And we're pleased as punched that you could be here with us to bring us home. So, so I told you when we were coming up here a couple sessions ago, Adam Dell is now with Marcus the Goldman Sachs unit. He said there's only two kinds of banks those who are screwed and those who don't know that they're screwed. Which one is C? Well, it's a bit of a Hobson's choice, but I think you're screwed if you're in denial. And I would say, as an institution, we're absolutely not in denial. And to that sound bite that was just said, that the next chapter of banking's being rewritten as we speak. The next chapter is digitally lead The next chapter has a different set of expectations and for status quo, you know what we're dead, we're 200 euros institutions that's reemerged itself several times and we're very much in that process today. Great. I wanna start with the reimagining that you're doing right now. And that's your consumer banking strategy. You're in the middle of something interesting, and that you're you're trying to become a National Consumer bank again, after having retrenched from having being one. Explain how you're going about doing that. So we have a bank today, a depository bank today, about 700 branches across the US, that are predominantly located in six People in the United States that carry a Citi card. Only about less than 10 % of those are actually bank customers. So I've got roughly 25 million people in the United States who carry a piece of our plastic. We know who you are We know what you spend on. We know, by the way, who your bank is. We know what matters to you. And likely we've probably got some affinity reward program that resonates. It could be thank you points, could be American Airlines miles, could be double cash back. And so in there, how can I actually use That to convince you to be a bank customer. When you think of today's age, our ability to provide our branch, our bank mobily, probably never been a better time to be able to do that. So you have a very clearly defined, addressable market, and that's not all of it, you'll sell banking services digitally To the people who aren't current crappy customers- Absolutely. But how is going? You're, what, about a year into this? Yeah, we're probably about six months, really, into it. And we've been testing and piloting and trying different things. And we talked about the first quarter, really, from a standing start. We went out and digitally raised $ 1 billion of deposits without really having done much in that channel before. We had the head of Marcus from Goldman on on earlier and you he obviously is very proud of having no branches because that means he has no branch costs. Why keep the ones that you have versus emulating that strategy all in. It's a great question. And so when I talk about this, I speak to it in terms of my family. I've got a 26 and a 30 year old And they're always all the time saying, dad come on branches get rid of them. [ LAUGH ] You got free advisors. Free advisors but actually when you think about banking today and I look around the room, there's some other gray hair in this room, and that the expectation of a big percentage of our customer base today is to have the ability, to have two experiences. To have the truly digital experience when they want, to open their phone, to look at their balance, to move money, to use gel, to pay, to do what they want to do, but they also like having the branch and they like having a person to speak to. And if you actually look at the profitability of banking today, the Millenials are coming, they were surely certainly dictate the future. But the vast majority or the profitability of banking today is really driven by the worldwide Baby Boom era, that's coming but you can't forget about this. And so actually today what we're forced to run, You had some interesting statistics I told you my if I could grossly generalize, generalize about the people who've been with us the past couple days, there are sort of, you know, true believers for the future of cryptocurrencies, blockchain, etc. And then there are those who are, you know, I don't know the polite way to put it, you know, living in the I don't wanna say the real world, but living in the current world, if you will. I think that's fair, the current world. Yeah. And your reaction to that is what? I'm a true believer, but I think you've gotta set the time frame. I was telling you, Adam, that oftentimes in certain industries, things occur slower than people might predict. And the example I would use that we've lived, is the ATM today ubiquitous everywhere. You know we have 60, 000 of them in the United States, was introduced in 1977. People often say that Citibank invented it. We didn't we found it in a garage. In Stockholm, Sweden, we commercialized it. The first year in the United States that branch count actually went down, ie there were less branches in the United States at the end of the year than the beginning of the year, was 2018. And at the time people said listen, today I can take cash out of it, pretty soon I'll put cash into it, pretty soon it's gonna be able to do all these things for me, which today it can. Branch utilization has changed, but the demand around the branches are still there. And when I think of this move to digital, it's a continuum of what I described, those who expect the truly digital to those that are living analog with a big cohort in between and a continuum that will continue to move over time. And talk also if you would about cash because I feel like cash has been something of a dirty word at this event and you don't think so. Well, again, kind of going back to, things create their own pace. What's interesting if I ask the audience, and said that two billion people in the United States But- It's kind of embarassing. Last year there were almost 30 billion checks still written in the United States, and cash utilization continues to rise. So again, shifts are happening, behaviors are changing, but They're gonna come at their pace. And our challenge of running an established institution is we wanna stay ahead, couple steps ahead of our customers, but we can't get so far ahead we lose them. And so we wanna make sure that we're developing the right things along the way. But we can't get so far ahead that we lose them. I wanna know if any, yes, please stand up and introduce yourself. [ BLANK_AUDIO ] Tim Baker, I work for the TIF. Yesterday, we had an executive from Amazon here. And someone asked them the question, Pretty much are you getting into banking? Will you get into banking? And I don't think you really answered the question. Yeah. Do you fear either Amazon or one of the other big tech companies? Apple, you have a lot of data on all of us building a digital bank and competing with you. Yeah. It's a question we get asked frequently and what I would say I don't know there. Ambition or intentions per say. But what I would say, is we don't take anything for granted and we're not dismissive. We're not dismissive of the Amazon, I'm sure we'll get to Facebook. Anybody who's got a couple of billion followers users, I think you need to pay attention to but I think there's There's channels that people go after, and there's more broad applications. And what I mean by that, I think of what you've seen going on in banking today, in many ways, is the disaggregation of banking into certain channels. Payments, and I'm guessing payments to Amazon being very relevant, call it $ 150 billion of sales 2 % everytime somebody swipes a card or uses the card. You can run the math on what that is. I'm sure they'd like to get in there and figure out a way to disintermediatie and save that. Beyond that theres savings, borrowing, protecting, spending and those pieces. Does Amazon wanna get into the rest of those? I don't know. The trick is, can you disaggregate, create value, and then reaggregate? And as you reaggregate, the world changes because in order to take deposits and do certain things, you need to be a licensed Institution as part of that and I think that sometimes, is the rubicon that people need to decide if they're willing to cross. So, I think we're in the stage of disaggregation and we'll have to see what reaggregation looks and feels like. Mike, tangential question, assess the success potential for the Apple card. With Goldman. Again, never dismiss somebody like apple. I think in there it will appeal to a group. I think the question around the card is, is it really gonna be so called top of wallet or the thing that you use? All the time, right? And if you look at spending habits today different things drive people to make different choices. I'm sure there will be some that will love to earn their Apple Points, or whatever they're gonna be called, and to be able to have access to the latest and greatest new hardware. That will have applicability to [ UNKNOWN ] and it won't. So I don't expect it to kinda be the true currency of choice for everybody, I think. But for the Apple files, it'll be a good alternative. Please. Great, hi, my name is Nevid from the [ UNKNOWN ] Society. So speaking of Apple Apple made the decision to remove the headphone jack. In a lot of cases with innovation, it requires sacrifice. What do you think your version of removing the headphone jack will be? The what? The headphone jack, so you can't plug in anymore in the same way. And they were willing to really Hurt their product as people understood it to get to the next product and he's asking you would you do something similar for us? Yeah, for us maybe it goes back a little bit to the analogy. I'm not ready to do it today. We've probably done it more than others in our strategy of really going to a physical light and really forcing a lot more digital interaction. With our customers then probably some other national banks that are there. I think you'll continue to see but in there I'm not. I'm not prepared to, in essence pull the jack and lock all the branch stores yet, but there'll be a point in time where I think you'll, you'll see the nature of physical presence and branches probably changed materially .>> Please Hi Mike Ina from ripple, but I started my career at Citibank spent ten years at Citibank, and was part of the Citibank internet team. in Long Island City. I was employee number seven. So I remember when no one believed that we needed email addresses or that people would look at their statements online and getting getting yelled at. By the current Ceo Or the legacy thing Yeah which was not you by the way, it was someone else. But I guess my question is, we've seen a lot of innovation happen. We've seen the internet, we saw mobile, we saw app. We're now in this block chain, digital asset world. The world is changing. You've mentioned running two banks, an analogue bank and a digital bank. My question is, ten years from now, when you look out and Sally Krocheck was here earlier, we talked about leadership. We talked about leadership and banking, and the profile leadership in banking. And I'd love to hear from you as you looked ten years out and building the legacy of who's coming up next What do the bankers of the future need to look like? Are they going to look more like the grown up version of the FinTech, challenger bank CEOs today? Or are they going to look like a more innovative set of the banking skills that we have running the big banks and I care a lot about this because I've been in banking and financial services for a long time. And I just don't see the leadership profiles changing. And I'd love to hear from you what you think about that. So the challenge we give ourselves is, with all due respect to great banks, or great fin techs, or whoever they may be, our challenge, if we go back to where Adam kind of started this with these two questions. Your vulnerability comes or your vulnerability would come if you said you know what, what we're going to do is really to be strive strive to be best in class. And we're going to use banks as our benchmark. Right? What what we come to work and say is that we need to make sure that we're matching or challenging best in life experience because that's the expectation. Need is to be satisfying best in life. So one is that change of mindset from the and then I think the the second piece of that is to have the platforms and to have the flexibility. So as we think about Libras we think about. A lot of these new forms of currency and payment methodologies. By the way, today when you think of the world, we're the world's largest cities, the world's largest mover of money every day, about $ 5 trillion a day. We're the world's largest trader of currency. View a lot of these things that are going to come as our customers wanting to have those choices, not many ways dissimilar from what those choices today and our ability to make sure that we can help facilitate what end up you know, kind of ends up being multiple wallets are multiple ways. Of being able to express and use those alternatives. Mike, when you tried to put a point on this question, could you envision a day in the near future when the CEO of Citi does not have a banking background? Background [ BLANK_AUDIO ] Yeah, I could I you know, I think it depends what you describe a banking background because [ CROSSTALK ] if you think of what's going on is you know, clearly that you know, there are some basics to banking which help in the job. [ LAUGH ] There's clearly a big regulatory a safety and soundness angle of the expectations. Of the government. And by the way, I would encourage FinTech not to lose sight of that. And I think we saw a little bit of that coming out of Libra and some of the ->> Yeah. The conversations that are there. And clearly technology is a big part of it. So I think it's a combination of those things as we go forward. Did Facebook approach city about being in the new consortium? Nope, did not approach us. And to my knowledge, they didn't approach any of the big banks. If they were to or If however the governance structure works. If the governance of this consortium were to approach city would you be interested in joining it would take a look at it. And. I wanna touch, unless I have another question, I wanna touch very brief. Yes, I do, right there, please. Jeff Her, Fortunate, I just wanted to expand what you told Adam earlier. You described yourself as a true believer and then you said giving customers what they want, would that extend to Bitcoin and cryptocurrency in the next year or two? The challenges with, and we've talked publicly about it, Certain aspects of Bitcoin or Cryptocurrency is the opaqueness around the sources of the money. And as a regulated institution around US Bank Secrecy Act, anti money laundering standards that would be outside of our ability to actually take or send. Those monies on behalf of people who are in some of those instruments. Very last question, the city is the most global of US national banks. We're living in a time of more trade friction than we've seen, I think in recent decades. Yep. How does that affect your business? And how concerned are you about that tension? Well, I would say we're not just the most global of the US Bank Group, I would argue the most global of any bank in the world. And I would say today that our clients need us more than ever. When you think about the fact you've got trade routes, constantly rerouting themselves and whether it's China or whether it's Mexico or it's Canada. Clearly trade has become a foreign policy tool and at times weapon supply chain around our clients and what they're doing, obviously critical to their livelihood and our ability. So as an example, you end up getting Schmoyer. Basically terrorists from the United States, we were able to step in and get soil rerouted from Argentina and Brazil, from our sins. So as you think about that, and the flexibility and the the mentality of the just in time supply chain, there's not a better partner than us to be able to help you as an example. Navigate some of these challenges. Mike, again, on behalf of Fortune, we're so pleased that you could be here. The bad news is we're out of time. The good news, as I'm going to tell everybody in a moment, is hat Citi is hosting cocktails very shortly and we hope to see you there, thank you. Thank you very much. [ APPLAUSE ] [ BLANK_AUDIO ]

Brainstorm Finance 2019: A Conversation with Citigroup CEO Michael Corbat 

Finance

He discusses what the finance industry will look like in 2030.
