Wall Street has reached an “inflection point.” After years of spending big on tech, America’s biggest banks are starting to see that investment pay off.
Citigroup CEO Michael Corbat recently said his firm reached a turning point last year in which its $8 billion tech budget, part of which is used for streamlining its operations to “shrink the cost of running the bank,” started to pay off in meaningful net savings.
“Last year, we crossed the inflection point of actually getting net savings on that,” Corbat said
And at a recent conference, Gordon Smith, JPMorgan’s president and consumer-banking chief, raved about the savings that were materializing within his division.
“In all of the years that I’ve been doing this, I’ve never seen the impact that technology is having on our business segment be so positive, be so sustainable and have such longevity,” he said.
Similarly, Howard Boville, Bank of America’s chief technology officer, told Dan DeFrancesco that Bank of America now saves $2.1 billion in infrastructure costs thanks in large part to its transition of workloads to its private cloud in 2013.
On the topic of transformation in finance, we’re hosting our IGNITION: Disrupting Wall Street from within event at the New York Stock Exchange on Monday. You can tune in to our event livestream, broadcasting live starting at 8:00am sharp.
I’ll be at the event, along with our editor-in-chief Alyson Shontell, and our finance team led by Olivia Oran. Come say hello if you’re attending.
And speaking of tech, Google struck its first deal under new cloud boss Thomas Kurian this week, buying Looker for $2.6 billion. Kurian said the deal gives the company’s customers better tools for making sense of the massive amounts of data they hold — whether that data is stored on Google Cloud or with rivals like Amazon Web Services or Microsoft Azure.
Industry insiders had predicted Kurian would do deals, and the reaction to the Looker deal was generally positive, with some saying it would give Google Cloud more of a competitive edge against Microsoft, Amazon, and Oracle. Megan Hernbroth talked to some of the investors getting richer off the deal.
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Quote of the week
“There’s a way to do [mergers] and there’s a way not to do them. The vast majority of people get it wrong.” — Martin Flanagan, CEO of Invesco, on the surge in acquisitions in the asset management business.
- Rich Feloni talked to Bob Moritz, global chairman at PwC, about the four things he believes every leader must do.
- Dan DeFrancesco talked to John Rainey, PayPal‘s chief financial officer, about what sets it apart from competitors like Stripe when it comes to dealmaking and the two areas the giant payments processor is focused on.
- Shana Lebowitz talked to Andreessen Horowitz’s managing partner and first hire, Scott Kupor, about what he looks for in founders.
- Matt Weinberger talked to Don Johnson, the executive vice president of Oracle Cloud Infrastructure, and Scott Guthrie, the EVP of the cloud and artificial-intelligence group at Microsoft, about why the two companies just came out of nowhere with a new cloud partnership.
- Ben Pimentel talked to Frank Slootman, the new CEO of $3.9 billion startup Snowflake. He dismissed the idea that he was brought in to hurry an IPO as “the dumbest thing I’ve ever heard,” and said it could go public within three years.
- Charlie Wood talked to Brain Corp‘s cofounder and CEO, Eugene Izhikevich, about how he secured SoftBank funding by selling a simple but bold vision.
- Kate Taylor talked to Kevin Hochman, the head of KFC‘s US business on comebacks, delivery, vegan “chicken,” and the chain’s new approach to menu innovation.
- Lucia Moses talked to Dirk Van de Put, CEO of Mondelez International, about why he’s rejecting ad agencies’ normal pricing and pushing for them to have some skin in the game.
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