graphic
News > Technology
The Wriston watch
September 15, 1998: 3:36 p.m. ET

Walter Wriston, former Citicorp president, on technology in finance
graphic
graphic graphic
graphic
SAN FRANCISCO (The Red Herring) - Former Citicorp president Walter Wriston is credited with developing the financial institution's first technological vision.
     Wriston, who ran Citicorp for 17 years, is widely renowned for his observation that "information about money has become almost as important as money itself" (the words are inscribed in the lobby of New York's Science, Industry, and Business Library), and he is the author of two books: Risk and Other Four-Letter Words (1986) and The Twilight of Sovereignty: How the Information Revolution Is Transforming Our World (1992).
     Although he retired from Citicorp (CCI) in 1984, Wriston presently sits on the boards of several biotechnology companies and two investment firms as well as on the advisory board of a telecommunications company. All the while, he monitors the information revolution's impact on finance, business, and government.
     In this interview with The Red Herring, Walter Wriston talks about the role of technology in finance.
What disadvantages do today's banks face?
     Everybody is in the banking business now. It's hard to tell the players even if you have the program. As a bank, your ability to move quickly is constrained. There are thousands of pages of regulations that restrict what banks can do. By comparison, the people who compete with you are regulated less onerously. If a bank wants to open a branch or install an ATM, it has to go through a lengthy approval process. If Merrill Lynch wants to open a branch, it rents a room and hangs up a sign. But technology has helped banks deal with this problem by permitting them to move across the country with toll-free numbers, ATMs, and Internet access.
     To what extent is consolidation in financial services driven by technology?
     Technology is partially responsible, in the sense that the mergers are even possible. When I came into the business, Citibank had a few hand-cranked adding machines, and the general ledger was hand posted. It would have been impossible to consolidate bookkeeping and cost accounting operations. I'd say technology permits consolidation, but I don't think it necessarily drives it.
     How important is data-mining capability to financial service providers?
     This is made to order for banks. The ability to have a huge database that a bank can mine in real time means that when a bank calls a customer, it knows that you've got a checking account at the bank, that there are two CDs in your safe-deposit box, that you use their brokerage system, that your income is "x" dollars, and that you live down by the Embarcadero.
     How will smart cards change money?
     It's estimated that by the year 2000, there will be 2.5 billion smart cards in the world--the electronic purse type. One in every four Americans will have one. People will use an ATM or home computer to download the money from their bank accounts to the cards.
     So if the regulators look at the declining level of bank balances, it may not mean the same thing as it used to. Also, these cards are going to be issued by everybody and his brother, not just by banks. The government now owns the mints (the Federal Reserve banks), but we're getting a lot of private mints--like Mondex and Microsoft.
     As commerce moves to the Internet, bytes and bits arranged in a certain way are going to be accepted as money. And it's possible that this money will never be redeemed for Federal Reserve notes. That will have an effect on the way the government looks at our economy.
     What's the most significant change that technology has forced on the financial service industry?
     It's changed the system of management in all of American business, not just finance. When the railroads were being built, Army engineers were hired, and they brought their hierarchical management structure to the industry. Today, computer systems make information immediately available to almost every level of an organization, and that empowers people. The thrust of new technology is, consistently, the dispersal of power. Back to top

  RELATED STORIES

Travelers cheques go Euro - Sept. 9, 1998

Smart-card venture backed - July 29, 1998

  RELATED SITES

Welcome to the Red Herring Online!


Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney




graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.