Good morning.
Earlier this year, as ChatGPT use began proliferating, and harnessing the technology while keeping one's data secure was still a mystery to many, Wall Street banks imposed restrictions on employees using it for business purposes. Fast forward to today, and the business case for generative A.I. has become clear.
“We must be proactive about embracing A.I. It’s an essential part of winning in the digital era,” Citigroup CEO Jane Fraser wrote in a LinkedIn post on Tuesday.
“Citi’s innovation labs have been working on A.I.—including the kind of generative models that power ChatGPT—for the past three years,” Fraser said. “In the near term, generative A.I. will drastically improve productivity. Over the long term, it has the potential to revolutionize all functions across our bank and the industry changing how we write code, onboard clients, service customers, detect fraud, develop market research and strengthen compliance and controls.”
Fraser, in sharing Citi’s principles for using generative A.I., added that one is to “stay on the front foot”—be prepared for anything. “Some, for example, have surmised that A.I. personal assistants will be the end of search engines and online retailers as we know it. The impacts on finance will be equally profound.”
The latest research by McKinsey estimates that generative A.I. could add the equivalent of $2.6 trillion to $4.4 trillion annually across 63 use cases analyzed by the firm. For comparison, the U.K.’s entire GDP in 2021 was $3.1 trillion, McKinsey noted in the report.
“Overall, the risks of not embracing generative A.I. far outweigh the risks of engaging with it,” Fraser wrote on LinkedIn.
Speaking of mitigating risk, that usually falls under the purview of the CFO, the strategic partner of the CEO. And technology often is a critical factor. During a recent conversation I had with Citigroup CFO Mark Mason, I asked him his thoughts on changes to the CFO role over the past five to 10 years. The focus on technology, he said, has proven an important one.
“Understanding end-to-end processes is really important and not necessarily something that would be intuitive or instinctive when you think about a CFO role,” Mason told me. “The other aspect relates to technology, and in particular digitization, and how rapidly both are evolving. And those two are in some ways related because one can enable a more efficient process."
Integrating deep institutional knowledge with new tech and new team members, he continued, is no small task.
“That’s really important," he told me, "because we’ve been around for 200-plus years. We’re the byproduct of numerous acquisitions. How do we ensure we keep the institutional knowledge on how those systems have worked, and at the same time bring in a fresh perspective to help evolve?”
Though a CFO needs to become more tech savvy, some aspects of the role haven't changed, Mason explained. “There’s no substitute for the discipline knowledge—you’ve got to understand finance, accounting, controller activity, treasury, liquidity, capital. You’ve got to understand how the business works. And then you’ve got to be able to bring a talented team together that allows you to actually run it as one operation.”
Successfully implementing generative A.I. likely will prove to be a team effort.
And for insight on how to navigate the market during these unprecedented times, check out the Fortune finance team's Quarterly Investment Guide released this morning.
Sheryl Estrada
sheryl.estrada@fortune.com
