Citibank’s e-Business Strategy for Global

Banking

Said AltınışıkMoustafa Abdulaziz

Asuman Çakıroğlu

Özgür Öztürk

Citibank’s Global Cash and Trade Division

Manage the flow of money for its corporate customers

Provide tools and channels to receive money and to make payment efficiently

Enable its customers to conduct transactions online

Citibank’s Global Cash and Trade Division

The Goal

Build a single web-enabled platform for all customers with similar service needs, develop integrated solutions, and reach new markets

Global Corporate Banking at Citibank

1812: Founded as City Bank of New York1976: named as Citibank N.A.1998: changed to Citigroup Inc.2001:Staff - 268.000Countries - Over 100Customers - 192.000.000

Global Corporate Banking at Citibank

Core ProductsTransaction services: cash management, trade and custody services

Corporate finance services: working capital finance, trade finance, asset-based financing

Treasury market services: hedging and foreign exchange

Citibank’s Cash Management and Trade

ServicesClients Multinationals, financial institutions, government sectors, local corporations SME businesses

Daily financial transactions$1 trillion worth

Citibank’s Cash Management and Trade

ServicesoCitibank understood that all banks offer similar services. othus they differentiated themselves through

Offering telephone hotlinesRelationship managers who understood clients’ needs

Product consultants who provide service expertise

Continous investment in technology

Cash and Treasury Management Products

Focus on finding ways to move money around in the most efficient manner

Focused on developing solutions to addressAccounts receivable process managementAccounts payable process managementLiquidity management

Trade Products

Offered Trade financeTrade servicesTrade support services

Product offering covered banking services and financing needs of customers who had import and export trade transactions.

Pricing And Customer Services

In pricing policy, Citibank emphasized on customer services(response time, technology, support)

By offering outsourcing CitibankSecured all the businesses from the customerGained a total relationship with the customerObtained economies of scale with a large number of customers

A Changing Global Environment/ Customers

Sophisticated corporate customers- additional services(collect payment online, access to efficient web-enabled financial processes etc.)Middle markets- internet banking capabilities

Banks needed to identify what clients look for and keep up with the ones they supposed to develop “consultative” relationships

B2B Market in 2000

Sophisticated clients were looking for ways to improve their traditional payment processes.Electronic invoicingAutomatic application of payments to accounts receivableOnline payment guaranteesMulticurrency payment managementPayment aggregation by invoice and currency

Payment Methods

Cheque–Most of B2B paymentsNotes and coins– Banker’s draft–Payment is guaranteed.Credit cards–Special presentation of cheques–Only in cases of extreme doubt about customerTransfers–from a bank account to another

Competition

New technology required major investment in people, risk and technological services and few banks were competing at the global transactions services marketplace.

Deutsche Bank and Citibank were two leaders and ABN AMRO was also developing its product range.

Citibank e-Business Strategy

Vision – Become the world’s leading e-business enablerAims : 1.Empower local, regional and global customers 2.help them take advantage of the efficiencies and opportunities created by e-commerce.

Citibank’s e-Business Strategy

connect

transform

extend

Six Key Elements ofCitibank

e-Business Strategy

Embed Citibank as the trusted brand within communities

Build a network of strategic partners

Help customer to serve themselves

Web-enable core services

Create knowledge-based e-services

E-Us

Citibank’s e-Business Structure

In March 2000 – Formated Internet Operation Group responsible for Internet activities between e-Citi and the bank’s business unit.

In April 2000 – e-consumer and e-business unitsIn May 2000 – e-capital markets and e-asset management units

Citibank’s Alliance Strategy

Citibank tried to excel all facets of e-business but failed to do so. Clients and technology were constantly changing and it was hard to keep up to clients’ needs.Citibank decided to form alliances in 2000

Citibank’s Alliance Strategy

Key technology players to form FinancialSettlement Matrix.com

● Oracle● Commerce One Inc. ● SAP AG● Wisdom Technologies● Bolero.net

FinancialSettlement Matrix.com

A Company to connect buyers and sellers in e-marketplaces while performing activities such as:

Payment ProcessingCredit ServicesOther services

through multiple participating banks and

financial institutions.

Connect

Customer convenience is important for CitibankProvide clients with various options to access CitibankInternet provides the flexibility to meet this demand

CitiDirect

Designed for corporate customersCustomers can perform various transactions on-lineTransactions take place in real-timeIn 8 months, 1000 customers were using it

Transform

Back office activities(loan prcess, cash mgmt)Not at the forefront of a customer’s mindTraditionally was a function of bank-customer relationshipCitibank realized that, this function, required more that 200 data centers, should be commoditized.

Regionalisation for Transformation

Process involves consolidating all data centers and merging them in SingaporeData is centralizedIn May 99, the number of data centers were decreased to 60

Regionalisation Approaches Considered

Take the biggest infrastructure already existing, and build it up to replace all the smaller centersGreenfield approach (ask where to get the best balance of all factors of production and start from scratch)Available people and skillsPure cost of labor (especially for lower-skilled areas)

Benefits of Regionalisation

Provided continual improvement opportunitiesReduced the time cycle for transactionsMinimized error rates to near zeroYielded new efficiencies for Citibank and customers

Internalizing the Web

Transformation focused on “Workflow automation”Employees could access to information in a much easy and reliable way: no phone calls, no documents checkedCentralization made it easier to access data through various security systems: e.g. signature verification

Straight-through Automation: by…

Continuous improvementArtificial intelligence projects to reduce error ratesReal-time, on-line transactions created a certainty for customers

Achievements

First in the financial services industry to receive a quality awardCustomer surveys favored Citibank in areas of accuracy, timeliness, accessibility and responsivenessProcessing became one of Citibank’s unique selling propositions

Extend

Building a new global infrastructure gave Citibank the opportunity to:

Deliver e-products more quickly and more efficiently

Ability to install capability improvements from one regional area to world-wide

Extend

Priority was to move all corporate customers to CitiDirectThe greatest concern of most customers was securityIn 2001 Citibank understood that it must provide old methods too for conservative SMEs and on-line services for MNCs

The Citibank Advantage

Global Reach268,000 employees in 100 countries.Pay importance in emerging markets which consists of 86% of world’s population and 43% of world’s purchasing powerStrong BrandInnovative, global bank offering excellent customer serviceContinuous Investment in TechnologyHeavy investment of technologyProvide customers most cost-effective, cutting-edge, reliable and secure solutions

Conclusion

The Internet changed how institutions made strategic decisions. Customer expectations and needs were increased.Citibank responded by:Web enabling access points to allow customers connect to CitibankBuilding a new global infrastructure to deliver products and services on-lineIntegrating products in new ways

THE END

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