Citi's AI driven productivity boom spells hard times for banking contractors
Banks have invested a lot of time and money into AI so, naturally, they want to see some return on investment. While this has led many full-time employees to believe that their jobs will be at risk, the people in the most immediate danger are contractors.
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In Citi's Q1 earnings presentation released today, the bank declared a "reduction in technology contractors as a result of productivity." AI presumably has something to do with it; the bank said that advanced and agentic AI tools are being "utilized by 10,000+ engineers to" - the presentation seems to have left the point unfinished but engineers are presumably doing something productive.
Citi said that AI has also "been used to remap 30+ years of legacy code in 2 days." Contractors in languages like COBOL, who specialized in working with this legacy tech, used to command great fees... perhaps not anymore.
It's not just Citi's tech teams being affected by AI. The bank said in its presentation that AI helped "creat[e] capacity of 1,700+ hours/month" in its markets team by automating tasks like "trade confirms, broker invoices, and interest claims investigations." It's notable that the language used is similar to the 'developer hours' that banks were reducing with their AI tools last year. Contractors in middle and back office functions may have equal cause for concern.
Contractors across banking have been complaining about their woes for some time now. Day rates have been declining and roles are being outsourced to cheaper contractors in low cost locations. AI will only exacerbate this.
For full-time employees, AI appears to be more of a help than a hindrance. The presentation states that over 80% of staff have onboarded AI and that there have been as many interactions with AI tools in the past quarter than every prior quarter since their inception combined. There have been 42m total interactions but, at a headcount of ~230,000, Citi's data implies that employees had an average of just one interaction with AI per day in Q1. Still, the bank is rumored to be weighing up a round of layoffs driven by automation, so don't get too comfortable.
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