Citi Q4 Shows Banking’s Future Is Embedded, Not Episodic

While investment banking and wealth management traditionally take the financial services spotlight, the infrastructure layer of global finance is becoming increasingly central to banks’ growth strategies.

While Citigroup CEO Jane Fraser highlighted in her firm’s Wednesday (Jan. 14) fourth-quarter 2025 earnings results that Citi’s M&A activity posted an 84% jump in advisory fees, the surprising story woven through the bank’s investor call was around payments, liquidity, custody and cross-border settlement.

The company reported net income for the fourth quarter of 2025 of $2.5 billion, on revenues of $19.9 billion.

“With record revenues and positive operating leverage for each of our five businesses, 2025 was a year of significant progress as we demonstrated that the investments we are making are driving strong top-line growth,” Fraser said in a Wednesday press release.

For the fiscal year, Citi’s Services business generated approximately $21 billion in revenue in 2025, up 8% year over year, with returns on tangible common equity approaching 30% on an adjusted basis. These figures stand out not simply because they are strong, but because they contrast with the more volatile performance profiles of capital markets and consumer-oriented businesses across the sector.

Citi’s Treasury and Trade Solutions (TTS) processed millions of payments daily across more than 90 countries and played a central role in U.S. dollar clearing worldwide. In the fiscal year 2025, Citi’s cross-border transaction values grew at a double-digit rate, while underlying fee drivers expanded alongside deposit balances.

This was not a Citi-specific phenomenon. Peer institutions with scaled transaction banking platforms also reported resilience in these businesses. What Citi demonstrated, however, was how transaction banking can shift from being a balance sheet-intensive utility to a technology-enabled services platform with improving economics.

One reason transaction banking is gaining strategic weight is that its cost structure is changing. For decades, the economies of scale in payments and cash management were constrained by legacy systems and manual processes. In recent years, modernization efforts have begun to alter that equation.

Citi’s multiyear investment in data platforms, controls and application rationalization reached a critical mass in 2025. More than 80% of its transformation programs are now at or near their targeted end state, and hundreds of legacy applications have been retired. These efforts reduced operational risk, but they also lowered marginal costs in high-volume businesses like TTS.

Artificial intelligence and automation further accelerated this shift. AI-enabled tools improved control assessments, increased customer self-service and supported software development at scale. In transaction banking, where profitability depends on processing efficiency as much as pricing, these incremental gains matter disproportionately.

Another implication of Citi’s TTS performance is the growing importance of embedded financial services. Transaction banking is not episodic. It is woven into clients’ daily operations, from payroll and supplier payments to working capital management and custody.

In 2025, Citi extended that embeddedness. Cross-border transaction values grew at a double-digit rate, U.S. dollar clearing volumes continued to rise, and commercial card spend expanded. These offerings reflect a broader industry trend toward real-time settlement and programmable money. As corporates seek greater visibility and control over liquidity, the line between banking infrastructure and enterprise software continues to blur.

These are not cyclical wins for Citi. They reflect a world in which supply chains are being reconfigured rather than dismantled, and where geopolitical fragmentation increases the value of a trusted global intermediary. As companies diversify manufacturing bases and manage liquidity across jurisdictions, Citi’s ability to move money, manage risk and provide visibility across borders becomes more—not less—important.

Read also: Tokenization and Treasury Innovation Shaped Citi’s Record Third Quarter

Elsewhere, in the first episode of a new podcast and video series from PYMNTS and Citi that debuted Tuesday (Jan. 13), PYMNTS CEO Karen Webster took the microphone with Ryan Rugg, global head of digital assets for TTS, to explore the impact of digital asset innovation across regulation.

Rugg identified what she called the “killer” use case, which is frictionless, 24/7 movement of money and liquidity.

“One of the green shoots is definitely around this 24/7, 365 frictionless movement of money and liquidity,” she said.

At the same time, the implications of Citi’s TTS performance extend beyond one institution. They point to a financial services landscape in which scale, technology and regulatory competence are converging rather than diverging.

FinTech firms have made inroads in payments and cash management, particularly at the retail and small business level. At the institutional end of the market, however, barriers to entry remain high. Compliance requirements, cross-border licensing and the need for balance sheet support favor incumbents with established infrastructure.

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