Citi Turns 200: Technological advances point to future

In celebration of Citigroup's 200th Anniversary, we are sharing stories from our rich history here on this blog. The 28th installation below covers how technological advances in the1980s improved banking processes and customer service. Read the 27th installment explaining how John Reed helped internationalize senior management, here.

Technological advances point to future

The 1980s see an increasing pace of change in banking processes, driving improvements to customer service

Major advances in computing, database management, and telecommunications in the late 1980s and early 1990s changed banking forever. "The big technological thing then was online interactive computing," recalled John Reed. "Batch computing was very common in the 1970s but it was in the 1980s and 1990s that you got into online interactive computing. Then the Internet, which is just a different version of that same technology, became extremely important.

"You have a world today that's used to online interactions with financial institutions and markets. That changed both the back office, in organizational terms, and the interaction with customers. The other technological changes were big database management - which allows you to manage your databases very differently and gives you information that you didn't have before - and global telecommunications. It was in the 1980s and the1990s that international telephone calls became easy. In the 1970s, we struggled."

In the late 1980s, difficulties experienced by savings-and-loan institutions provided Citicorp with an opportunity to make acquisitions and expand its domestic branch coverage outside New York. It used this new network to take a lead position in the early forms of virtual banking. "At that point, John Reed moved away from the idea that physical distribution was compelling, and made the strategic bet that over the horizon 'virtual' distribution would outpace physical distribution," said Steven Freiberg, who later headed the global cards business. "We did a lot of experimentation from an innovation standpoint with smart phones, things of that nature, trying to find ways to distribute that would unlock us from the high costs associated with a traditional, physical presence."

At one point, Citicorp teamed up with Matsushita Electric Industrial Co. - the Japanese company behind the National and Panasonic brands - to experiment with banking via smallscreen devices that could be attached to telephones. "John was pushing us down the path of leveraging technology, just as we did in the 1970s," Freiberg recalled. "It may have been early - we did not have a huge penetration of PCs, there was no Internet and everything was dial-up with low band speeds. So it was hard. But a lot of the seeds for what we do today - both in the U.S. and overseas, where we have limited distribution - were sown back in the late 1970s and the 1980s."

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