Citibank’s E-Business Strategy for Global Corporate Banking (2008)

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A: Citibank’s priority was to move all its corporate customers onto CitiDirect because its main goal was to retire the legacy systems of electronic banking. However, not all of their clients were on board with the idea. MNCs and SMEs had their different needs with SMEs not being e-enabled and still using the legacy systems.

Knowing the disparity between the two segments, Citibank conducted business accordingly. In 2001, legacy systems were provided for the more conservative SME customers whereas the MNCs wanted to do all transactions online. Depending on the size of the organization, different services were offered.

CitiBusiness was a one-stop financing solution offered to SME entrepreneurs. Products and services included cash management, internet banking etc. Whereas the needs of the MNCs were clearer as they knew what was it that they required.

From a strategical point of view, it was clear that unlike the MNCs, SMEs would not come aboard that quickly. So, they had to ease them into the online platform with time.

6. How has Citibank’s Cash and Trade Group managed to develop different e-business

products for varied industries? With the market changing so rapidly, how does Citibank

identify market needs?

Citibank changed its business structure from a decentralized one to a centralized one. It’s Cash and Trade service was a core product that was offered to corporate customers. Citibank offered a multitude of customer services like telephone hotlines, relationship managers who understood clients’ needs and product consultants who provided service expertise. Most importantly, Citibank made continuous investment in technology to support both the front-end and back-end electronic banking systems.

Citibank had moved beyond traditional boundaries of banking services by taking over some of the backend/back office functions of its customers. Customers could rather focus on generating sales and revenue whereas Citibank would take care of labor intensive payment & collection process on behalf of customers.

This not only made customers more dependable but also helped Citibank understand their customers better. As technology advanced with time, so did the needs and expectations of the customers. In order to move with the times, Citibank took its strengths from the traditional banking systems to the online system in a way that would add value to its customers.

7. One of Citibank’s challenges is in managing vendors and suppliers without allowing them to exploit its clients. How does Citibank protect its clients from its strategic partners?

A: Before the year 2000, Citibank tried to excel at all facets of e-business – a strategy that failed. Post the year 2000, their strategy focused on alliances and the use of its partners’ strengths.

Following are some of the points that work for Citibank:

- There are too many suppliers available to partner with Citibank considering the things it brings to the partnership.

- It has from the beginning, invested heavily on technology. Initially, it tried developing the entire web platform on its own, but now Citibank is making use of the assistance provided by its partners and at the same time not completely outsourcing the job.

8. Prepare a SWOT analysis to evaluate Citibank’s e-business strategy.

A: SWOT analysis of Citibank’s e-business strategy:

Strengths

- Already having a large and established customer base and global presence.

- Since Citibank invested heavily in technology from the beginning, they already possess the technical expertise and infrastructure.

- Differentiated pricing of products.

- The profit generated due to more and more customers outsourcing their back-office work.

- Customer-centric approach.

- Strong financial presence across the world.

- Existing strong core services.

Weaknesses

- Revenue vs. Expenses: One of their biggest weakness has to be difference between their expenses and the revenue generated. Between 2005 & 2006, Citi’s revenue grew 8% & expenses (operational grew 15%).

- Tech companies provide heavy competition by using their existing technical infrastructure and expertise.

- Since Citibank focused heavily on customer services, it had set a standard price for each service but pricing was further based on volume & value of payments.

- Maintaining standard services on a global scale.

Opportunities

- Citi’s e-business strategy was to web-enable its core services develop integrated solutions and reach new markets.

- Going digital was a great step towards automating processes that would result in:

- Increased efficiency.

- Reduce human intervention/errors.

- Chance to serve more customers.

- Achieve low cost for delivery.

- Providing back-end assistance to customers along with web enabling the payment process. Hence, diversifying business.

- When banks were walking away from the ICM business when it had stopped to be profitable giving Citibank an open field to grow as it had only a few other banks like Deutsche Bank that was serious competition which could give it a head start as well as a monopoly in the digital market.

Threats

- As online banking was in the nascent stage during the aforementioned period of time. At one end, MNC’s wanted automated host-to-host product interfaces & on the other side, SME’s were more conservative & not ready for web based solutions.

- To invest such amounts of money in an already slowed-down banking market. Revenue targets were harder to reach.

- As competition was tough, banks kept the charges related to credit cards, relatively low.

- To safeguard customers’

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