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

CITIBANK’S E-BUSINESS STRATEGY FOR GLOBAL CORPORATE BANKING (2008)

1. What are the impacts of the internet on the competitive landscape of corporate banking? (Hint: use Porters 5 forces)

A: Ever since the dotcom boom of the late nineties and early 2000s, the internet has been on the crux of every single major advancement or innovation of any major company, especially, banks. With tech savvy customers increasing everyday it was important for every single bank to evolve their traditional practices to become more web-based.

The different approaches, different companies had towards technology. With some being more open to technology than others and some being more traditional or conservative when it came to changing the way they did their banking. Adapting to the various types of organizations has to be one of the major challenges. As in Citibank’s case, the MNCs were more inclined to the new innovative methods of banking than SMEs.

Porters 5 forces framework uses the following criteria’s:

1. Threat of new entrants
2. Threat of substitutes
3. Bargaining power of customers
4. Bargaining power of suppliers
5. Industry rivalry

The following are the impacts of the internet on the competitive landscape of corporate banking with the help of Porters 5 forces:

Threat of new entrants: As mentioned earlier, the dotcom boom of that period led to a time where a whole new market for online banking was presented to everyone. Now, it was a matter of how organizations could make good use of the new playing field. Other banks were also coming up with solutions during that time. Some MNCs were impatient, they could not wait for the banks to develop new web based financial products for them, so they embarked on developing their own systems. Amongst other banks, ABN AMRO and Deutsche Bank were two who were also making a serious push towards developing such web based financial systems.

Threat of substitutes: With that period of time being a very competitive one, it was only a matter of when a company could utilize this opportunity. The advent of the internet also brought a number of new service providers along with banks like ABN AMRO and Deutsche Bank, also, making strides by investing millions of dollars in the development of the necessary technology. With a number of existing customers being hesitant to use the new technology, it lead to the rise of a threat of substitution as well.

Bargaining power of customers: Citibank had created a niche for themselves with their great focus on customer interaction and satisfaction. It was only natural for that level of customer satisfaction to extend to their web systems. With different size companies having different requirements, it was important for Citibank to develop a web based platform that could satisfy their customers’ needs. MNCs required more sophisticated and efficient platforms such as custom-built host-to-host product interfaces. Whereas, SMEs were more conservative and were not ready for web-based solutions. 

Bargaining power of supplier: With the advent of the aforementioned dot com boom, Citibank made substantial amounts of investment to change their banking system from a decentralized to a centralized one.

Industry rivalry: The period of time led to other companies in the financial sectors to develop new web based platforms. However, Citibank’s aggressive approach towards the development of such platforms led to them being the only bankcard issuer in the financial sector that allowed local-currency and local-language programs to clients worldwide by using its own propriety and customer service operations as well extensibly consolidating their place on top of the pecking order in the financial industry.

2. What has Citibank done to differentiate its e-business products from those of its

competitors?

A: The ever-increasing focus on customer satisfaction and convenience has always been the goal for Citibank. It was this approach that helped them differentiate the e-services from their competitors. Citidirect allowed corporate customers the platform to do full transactions online from anywhere with internet access.

The efficiency of the services provided by Citibank also led to them to differentiate its e-business products. Factors such as continuous investment in technology, easy access to their web based platforms, securing transactions and customer information and prompt telephone support helped them consolidate their position in the field of e-business.

3. What can Citibank do to create competitive advantages?

A: Technology is at the forefront when it comes to any kind of advancement in business today. Some of the ways in which Citibank can gain competitive advantage are:

• The use of data analytics to have a better understanding of customer usage patterns.
• Increased focus on artificial intelligence(AI), providing cloud based solutions and also giving the customers integrated solutions where the bankers can conduct online interaction with the client face to face using instant video conferencing to enable a better interaction.
• Attract more talented and bright people from the market.

4. How has Citibank successfully converted its traditional money management business into an e-business? During the process of transforming traditional assets to digital assets, what issues should a company like Citibank take into account to ensure successful

implementation?

A: Citibank invested heavily in technology during this transformation phase. From the beginning, their main objective was to provide their customers the most efficient, reliable and cost-effective banking solutions. Key partnerships with technology giants like Oracle, SAP AG, Commerce One Inc etc were crucial as well when it came to converting their traditional money management system into an e-business.

Some of the main issues that need to be taken into consideration are how easy, convenient and accessible the online system is to the customer. Citibank’s initial heavy investment in developing a technological infrastructure was crucial in its success. For successful implementation, the focus should be on the ease of use for the customer as well as keeping the user’s data secured in a way that the user can actually use the system without hesitation in regard to their assets and information.

5. What actions has Citibank taken to serve the needs of two very different market segments, MNCs and SMEs?