Citigroup likely to consolidate IT, back office ops

Citigroup on Wednesday is expected to announce its restructuring plan and information technology consolidation is likely to be a big component.

Bloomberg is reporting that Citigroup may cut 17,000 jobs as the result of a three month efficiency review designed to cut annual expenses by $1 billion. A chunk of that savings is likely to come from IT.

Citigroup CEO Charles Prince alluded to the need to consolidate computer systems on the bank's fourth quarter conference call in January.

"We have a lot of separate, middle and back office businesses. Each of our consumer businesses, mortgages, cards, consumer finance has its own separate middle and back office business. Do we need separate middle and back offices for each of those businesses? Do we have our infrastructure in the right locations? I don't mean only offshoring but also inside the U.S., do we have people in New York that ought to be in San Antonio? Do we have people in the U.S. that ought to be outside the U.S.?"

On that same conference call, Prince also said Citigroup had to "rebuild and connect old -- sometimes very old -- technology systems."

The big question: How did Citigroup get a rat's nest of information systems? Other banks take pride in being cutting edge on the technology front. Sure Citigroup has acquired a host of companies, but back office operations should have been consolidated a while ago.

For instance, Bank of America, also built via acquisition, makes consolidating IT systems a priority after every purchase. Other financial services firms, notably TD Ameritrade, have technology integration down to a science. These firms do have hiccups, but they don't let multiple systems run in parallel.

Now Citigroup has to play catch up.