Citigroup builds fintech marketplace
It will be interesting to see if this rather less stable or credible market compared to the interbank FX market that Citigroup used to major on will be more successful for the bank than its own attempt to go down the retail FX route, having canned that after just a few years.
For over 17 years, Citigroup was the largest interbank FX dealer by market share, until it tripped itself up by publishing a report in 2016 stating that it expects over 57% of all OTC counterparty credit agreements with all Tier 1 banks to end in default.
This led to a retraction of prime brokerage agreements to OTC derivatives firms by Tier 1 banks and a draconian implementation of high balance sheet requriements, meaning that any prime of prime broker which could not demonstrate that it was over $50 million in credit at the bank would have its prime brokerage agreement removed.
This paved the way for the non-bank market makers to come to the fore, with XTX Markets having been the leading Tier 1 FX liquidity provider globally since 2018, with many more non-banks in the top ten, whilst the Tier 1 banks, along with former leader Citigroup, languish and struggle.
Today, however, Citigroup’s new direction has come to light, as the bank jumps on the trendy bandwagon of Amazon-style marketplaces and goes looking for the unstable and untested ‘fintech’ startups rather than support its traditional and well ordered core business of FX dealing to OTC counterparties.
Citigroup is building a marketplace of third party fintech apps, signing data access agreements to customer-approved accounts with eight startups and data aggregators.
Citibank customers will be provided with a way to permission and share their account information with financial apps and services through the use of API token-based technology.
“At Citi, we believe in giving our customers choice, convenience and control of their financial data,” says Mike Naggar, chief digital officer, Citi’s US Consumer Bank. “Through the use of APIs, these agreements will help provide a seamless and secure data sharing experience for Citi customers who choose to share their financial data with third party apps and services.”
The first companies covered by the data sharing agreement include, BillGO, eMoney, Envestnet Yodlee, Expensify, Finicity, Intuit, MX, and Xero.
Citi was among the first banks to launch a global API Developer Portal in 2016 to spur collaboration with fintech companies, developers and consumer brands. The API catalogue currently houses over 120 APIs and thousands of users in 16 markets.
It will be interesting to see if this rather less stable or credible market compared to the interbank FX market that Citigroup used to major on will be more successful for the bank than its own attempt to go down the retail FX route, having canned that after just a few years.
