Amid a tsunami of technological and operational change in the banking industry, Citigroup’s Vanessa Colella finds herself in a perfect position to influence crucial decisions at the company.
As its chief innovation officer and leader of the Citi Ventures and Citi Productivity teams, Colella can draw on her experiences as well as ideas from team members and partners to help determine what technologies the company explores, which ones it invests in and how those are incorporated into its business lines over time.
Colella joined the megabank in 2010 after years of working with venture capital companies and at Yahoo in a data-strategy role. Last month she was named a standout leader as part of American Banker’s Most Powerful Women in Banking program.
She is also scheduled to deliver the keynote address at American Banker’s 2021 Digital Banking conference in a few weeks, where she plans to discuss how financial institutions should rethink their approach to innovation while navigating the explosion in digitization and sweeping changes in attitudes about climate, society and government.
Colella sat down recently with American Banker for a question-and-answer session about these topics, how open banking could help small-business borrowers and the overall industry landscape.
Banks have plenty of challenges with new competition and balancing demands of tech-savvy consumers and longtime customers. On top of that, they have to determine what open banking will mean and how best to incorporate data-sharing principles and fintech partnerships. Is it as overwhelming as it sounds?
VANESSA COLELLA: Very little change in the world is a smooth path from A to Z. There will be lots of good that will come out of the spirit of open banking. When I think and talk about open banking, I try to think of examples that are not just about “let’s aggregate everyone’s data for everything,” but more about what are some of the benefits you get out of bringing data together and creating a kind of transparency. Citi just released a lending platform called “Bridge built by Citi” aimed at small-business owners to help them get liquidity.
How exactly does that platform reflect the spirit of open banking?
Years ago when people were applying for college, they had to have applications mailed to them. It was different for every college, and if you wanted to apply at more than one place, you had to replicate that process. That is the way small-business lending is today. If you want to shop around to see what the best loan is for you, you have to go to different banks and fill out different applications — and that is really inefficient. We wanted to build a common app for small businesses, and we did this with more than a dozen financial institutions. In thinking about the borrower and lending side, we see if applications fit the sweet spot of what the bank would want to underwrite. They can raise their hand and have a potential relationship with that borrower.
Wouldn’t some banks still be somewhat reluctant to participate through an open platform like that?
People haven’t been brought up in banking with the sharing of information in mind, but there are tons of things like “Bridge built by Citi” where, if we can share pieces of information, we can have a better outcome. We can match a potential borrower with the right bank for them and the right kind of terms and we can help banks, including minority depository institutions, to have access to borrowers that they might not have had access to before.
With digital transformations involving the cloud and application programming interfaces becoming the norm, technology partners often make it sound as if this sort of change can happen quickly — sometimes in a matter of hours. Is that how it really works?
It depends on what you are talking about transitioning to the cloud. A company starting from scratch used to take $10 million in financing to get started, but can now get started for $5,000. Why? Because you don’t have to buy computers; you can put all of that stuff right away in the cloud and use the capacity you need. But that is obviously very different from running a global financial institution that is moving $4 trillion around the world everyday to virtually every country. The important thing about cloud is that it enables an environment in which there is continuous upgrading. When people talk about the magic of these tools, part of it is that someone is always improving those tools and those improvements flow out as upgrade benefits. It’s part of the positive attributes of using the tools.
In preparing to deliver your speech at the Digital Banking conference, do you believe you’ll have part of the audience still trying to be convinced to make technological changes or to upgrade legacy systems?
I don’t think there is any uncertainty; I think 100% of big banks understand that we need to partner with fintech and tech companies to work in data and cyber, not just for client-facing tech, but also for enabling infrastructure at the bank as well. It’s an absolute certainty that partnering with external companies is imperative.
So, you don’t really have to sell the “idea” of surviving in the future?
I don’t have to spend any time talking about disruption. We have all seen it; everyone has been through some type of disruption over the past several months. It is true in financial services, education, health care and across the board. When that happens, though, you don’t want people to be embarrassed to ask about how to go about things. The fact that everyone understands we have to move more quickly and innovate and keep pace with changes around the world, it doesn’t mean we have all of the answers about how to do it. Sometimes when it becomes common knowledge that we have to change, people become embarrassed to ask questions about it. As it becomes an accepted thing, and everyone understands that, it doesn’t mean everyone knows how to go about making these changes. So there should always be questions.
What’s one thing you think will be important to the future of banking?
The year 2020 was one in which everyone recognized that there is an S in ESG standards for businesses. If you were into ESG before 2020, it kind of meant climate change and green, but in the last year that “S” really came to the forefront. How do we really deal with societal issues, which intertwine with environmental and government issues? How integral ESG is going to become to all businesses, and certainly to all financial institutions, is not going to be a passing fad. It is something that is always going to become a core priority.