How Big is the Core Banking Win for FIS at Citibank?

Analyst: Bill Bradway

Febuary 19, 2010

FIS disclosed during its 4Q2009 earnings call on February 4th that Citibank's US retail bank would convert to its Systematics legacy mainframe core banking platform. Earlier Analysis & Opinion briefs have addressed Citibank’s US retail banking strategy and related issues (see A & O Briefs 2007-10, 2007-12, 2008-03). Multi-billion dollar cost reduction programs dating back to 2007 led to speculation that Citibank might consider a retail core banking system upgrade. Competing core banking vendors would quibble over the use of the term “upgrade” and would substitute “consolidate” as a more accurate description of this decision.

In February 2010, Citibank confirmed it has cut $1.42 billion from its operations and technology budget at the mid-way stage of a three-year campaign to eliminate $3 billion in IT spending out of its original $4.6 billion reduction target. One of management's first moves was to centralize IT decisions in New York. Obvious initial targets have been the consolidation of data centers, elimination of duplicate legacy software applications and improvements in server utilization and storage. Citibank realized a big reduction by shrinking its data centers from 42 to 21, converting several credit card business units from a dozen card processing systems onto a single IT platform and consolidating mortgage origination systems from five to one. Now, the time to standardize its core banking technology in the US is here.

• What key factors lead Citibank to make this decision?
• What are the implications for FIS and its core banking competitors?

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