Citibank - Institute for Information Business

wwwai.wu.wien.ac.at

Citibank - Institute for Information Business

Hidayet Bahadin, Berk Vardar, Omer Oy ve Emrehan Seyhan


Global Corporate Banking at Citibank

Citibank’s Cash Management and

Trade Services

Changes in the Global Environment

Citibank e-Business Strategy

The Citibank Advantage

Conclusion


• In 2000, Intense competition and dot

com boom force Citibank and its

competitors transform their business

• The strategy was “Connect, Transform

and Extend”

• There were different needs for

different customers (MNCs and SMEs)

• How could Citibank integrate the

Internet into its strategy and create

competitive advantage


Citibank incorporated in 1812 under the name of

Citibank of New York

• Experienced several mergers

Citibank N.A. Was adopted in 1976

• After the merger with Travellers Group in 1998 the

name is changed to Citigroup Inc. İn 2001

• By 1997 Citibank was one of the most profitable

Bank in US with US$3.59 billion

• The core products were grouped into “Transaction

Services, Corporate Finance Services and

Treasury Market Services


• Target corporate clients were multinationals,

government sectors, local corporations and

SME businesses

• Approximately US$1 trillion worth of financial

transaction were cleared around the world daily

(foreign exchange transactions, equities, deposits,

settlement of a trade transaction or payment of

insurance policies)

• It differenciated itself by offering telephone

hotlines, relationship managers, continuous

investment in technology.


Products

Cash and Treasury

Find ways to move money around in

most efficient manner possible

Accounts Recievable Process

Management, Accounts Payable

Process Management, Liquidity

Management.

Trade Products

Trade Finance, Trade Services, Trade

Support Services for import/export

transactions


Pricing and Customer

Services

• Standart price for each service but price

discrimination by client volume and value.

• Emphasis on response time, technology and

support gave confidence to customers

• Customers don’t deal with paper based,

highly manual intensive payment and

collention process.

Citibank secured all the business from the

customer and gained a total relationship with

corporate customers when they outsourced

all the back-end processes


Smarter and Tougher Customers

The Internet allowed many corporations to sell their

products directly to users rather than selling solely

through wholesalers.

Customers were demanding more sophisticated e-business

solutions in accordance with the increasing usage of the

Internet. Solutions such as online payment collection

and web-enabled financial processes.

In addition to corporations, middle market companies were

also more interested in online services, so a bank

should follow their businesses and needs carefully to

provide top quality solutions.


Clients were looking for improving their payment processes.

They demanded electronic, invoicing, automatic application of

payments to accounts receivables and on-line payment

guarantees.

On the payment side, multi-currency payment management and

payment aggregation by invoice and currency were required by

businesses. They were looking ways to eliminate paper disputes

by attaching information to payments.

Despite the boom that was expected in B2B e-payments, large

majority of the B2B payment were made by cheques in addition

to automated clearing house networks, a non-internet system.

Majority of SME were using cheques and corporations that use

ACH networks did not have integrated data.

Other methods were also available such as: Notes, coins,

banker’s draft, credit cards, special presentation of cheques and

transfers.


Some MNEs started implementing their own web-enabled financial

products before the banks and disintermediated banks. There were

also other MNEs that expressed their interest of cooperation with

banks for future developments.

This required vast resources, and consolidations that were taking

place meant fewer bank were competing for this market. Citibank

and Deutsche Bank were leading the competion while ABN AMRO was

also following from behind.

In Early 2001, Deutsche launched global db-Ebills payment service

which could deal with various currencies, languages and business

practises.

Other large banks were cooperating also for providing their

customers single global solutions. In International Cash Management

(ICM) companies work with lead banks or their local partners.

Although most of the Fortune 500 companies preferred Citi for these

purposes, Citigroup faced fierce competition also from tech

companies who provide similiar solutions.


Serving people by creating efficiencies and

opportunities trough e-commerce is

Citibank's main aim

Vision: to become the world’s leading e-

business enabler (delivering online

transactions worldwide)

E-business strategy: connect, transform

and extend


Goal: customer convenience

Provide client more channels to access

Citibank and become flexible to meet

demand

Web-enabling current services

Build an infrastructure as a foundation

for all services (Citidirect- corporate

customers)


Regionalisation: consolidation of all data centers within

each country > move them to Singapore =

Centralization of data

Workflow automation: new systems to manage

automatic processing of transactions

Advantages of regionalized processing centers:

reduction cycle time transactions, secure databases,

minimize error rates and new efficiencies for customers

and employees.

Online and real-time processing> direct access to

information for customers and employees > efficient

working, cost savings, and comfort for customers.

USP: excellence in processing business > transparency

of the process for customers


Building a global infrastructure> deliver e-

products quicker and more efficiently.

Capability improvements in one region >

deploying in other regions.

Enhance system according to changing customers

needs.

Moving customers from using Old-style electronic

banking >> Citidirect (difficult process because of

customers security concerns) > slow in

introducing web-based applications > sol: educate

conservative customers


Formation Internet Operation Group: committee

charged with spreading responsibility for internet

activities

2 unites created (2000): E-consumer and E-Business

(aim: infuse internet into all consumer and corporate

banking activities)

Traditional Business Units formulating internet

strategies

Bringing people from business lines and internet side of

operations together = decentralized approach

centralized approach (Mr. John Reed, e-city)


Before 2000: aim to excel at all facets of e-

business (software and systems development and

front end services) > failed strategy (client needs

and software technology changing)

2000: focus on alliances and use of partners

strengths (complementary technology,

infrastructure or access to markets)

Alliances: Oracle, Commertce One, SAP AG

2000: launch of Financialsettlement Matrix.com

(connect buyers and sellers in e-marketplaces with

payment processing, credit and other services)

Citibanks value in alliances: financial service

expertise, global presence, strong customer

relationships, trusted brand


Citibank employed 268.000

employees across 100 countries

Citibank has implemented an

Embedded Bank strategy

Citibank behaved as local bank in

each country

Citibank set senior management from

country’s citizens


Citibank had developed strong brand

recognition

Customers regarded Citibank as an

innovative , global bank offering

excellent customer service


Citibank is committed to hold position as a

premier supplier of cash management

Citibank investing heavily on technology

Citibank’s main goal is to provide the most

cost effective , cutting edge, reliable and

secure solutions

Citibank see technology as their biggest

comparative advantage


• The internet importantly affected banking

sector

• Technology changed customer expectations

• This improvements are challenges in

banking sectors

Citibank successfully responded to this

changes with ;

• Web enabling Access points

• Building a new global infrastructure

• Integrating products in new ways

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