“Grounded in the principles of venture capital and Lean Startup methodology, D10XSM is Citi’s internal growth model. This global program encourages internal entrepreneurship by empowering Citi employees to build, test, and launch new solutions that are exponentially better for our clients.”
This is how Citi markets D10X or Discover 10X – the bank’s approach to encouraging and accelerating innovation both from inside and outside the company. DCX10 is the product incubation arm of Citi Ventures.
In this exclusive with FutureCIO, Victor Alexiev, the Asia Pacific head of Citi Ventures Programs & Strategic Partnerships for ICG, reveals how the bank aligns its innovation strategy across the global organisation. ICG means Institutional Clients Group.
The associated products under ICG include markets and securities services, treasury and trade solutions, private banking, banking, capital markets and advisory, and Citi’s Global Perspectives & Solutions. He cited the example of Proxymity as one outcome from the D10X initiative.
The D10X targets
Every initiative revolves around an objective – a target. According to Alexiev, what differentiates D10X from other incubator program is the focus.
“Essentially D10X focuses on client-centred innovation. The output are basically new client value propositions, new business models, or new engagement channels for our clients. It’s not about technology, not about efficiency, it’s about client-centricity,” he commented.
He also pointed out that whilst D10X is a global initiative for the bank, the products or solutions that come out of each region may and can be focused specifically to the needs of the local market.
For instance, in North America D10X also exists to support the region’s consumer business. In Asia, the focus is around B2B and B2B2C. Alexiev pointed out that the fragmented nature of the region’s consumer fintech ecosystem would mean the necessity of putting in more resources in order to achieve meaningful results.
Methodology and strategy
Citi explores internal use cases or proof of concepts – what can be built internally that addressed client needs.
“This may mean new technology, new understanding or a new view of how we engage with our clients. It is possible that in the process we may discover Fintechs that we may want to partner or invest in. The approach can be either build, buy or invest as a partner,” Alexiev added.
He also acknowledged that on occasion the requirements may mean that the talent and expertise will be something not available from inside Citi. “We will build up an entire new P&L with its own resources that fits the new business model. But this must be part of a client-centric value proposition,” he clarified.
Sources of innovation
Alexiev is quick to acknowledge that innovation can come both from inside and outside the organisation. So why the company does encourage an innovative entrepreneurial spirit from among its employees, he is open to partnering with outside companies to address the pain points of Citi’s customers.
“We don’t do technology for technology’s sake but as of a client problem. While some innovation labs would sometimes explore technology in and of itself as in to assess the impact to business. Our focus is essentially on the funding model in the product management model and the client centricity. We partner with the labs as delivery organizations,” he explained.
Emerging technologies of interest
Alexiev said he was keen to explore technologies that have use case or applications to the financial services industry. He pointed to Open API as one technology that will change the industry as adoption continues.
“Any form of big data management, as a component of artificial intelligence, which is essentially different ways of processing that data in order to have more predictive analytics-based or data-driven decision-making within the organization. These things are having a lot of impact on the way we do business and the way our clients experience doing business with us,” he continued.
He also said he is tracking blockhain and distributed ledger technologies because these are going to change the nature of what assets represent.
He is quick to comment that technology doesn’t really solve problems per se but can scale solutions to solve problems. “Its important for us to understand where the friction occurs and then figure out how to apply technology to resolve the friction and create customer value,” clarified Alexiev.
The road ahead
Asked on the future of D10X, Alexiev is confident that Citi management understands the strategy, value and direction of the initiative. He acknowledged that leadership recognizes the importance of responsible experimental innovation.
He also acknowledged that regulation exists for a reason and working with regulators is an essential part of the Citi culture. He also sees collaboration, cooperation across the industry.
He cautioned for more pragmatic thinking on innovation. “There is a lot of theorizing going around. In contrast software development is a practical domain. If you want to be digital you have to bring in people who have actual experience building [software] products and not just talk,” he admonished.
Ouch!
“Finally, there is a need to bring in non-traditional talent into the design team. The next generation of products will benefit from the perspective of people with arts or history background [by way of example] so they can help brainstorm what the next products or services will be,” concluded Alexiev.
