Professional Documents
Culture Documents
Lee Dubois
Overview
CitiBank is one of the most popular international banks and credit card giants in the U.S. Headquartered and Founded in NYC, with their credit card dept. headquarters in South Dakota. As of 2007, it is the largest bank in the U.S. by holdings. Its largest sharedholder is Prince Al-Waleed bin Talal of Saudi Arabia.
Founded in 1812
Citibank Online
CitiBank was interested in expanding into online banking, had many variants over the years. Direct Access vs. Citi F/I
CitiBank F/I, championed by John Reed, was essentially a pure-play bank, owned by Citi but operated separately.
Direct Access was basically the web-enabled version of their old dial-in PC banking system.
Citi F/I
Management envisioned a separate online organization that would eliminate the costs of having buildings with impressive lobbies and having to hire and pay personal attendants. Research firm Jupiter anticipated a 400% annual growth in online banking. Citi wanted to jump in on this.
Citi F/I
Started in 1997 by John Reed, alongside other competitors such as Wingspan.com, BankOne's pureplay internet bank.
These founders were fueled by excessive optimism and nice predictions, but their services fell short.
Both Citi F/I and Wingspan.com weren't doing too well, and were not gaining as many customers as anticipated.
Citi F/I
Mark Parsells, a former Wingspan.com key personnel, was hired by Citi in 2000, the same day that John Reed announced his resignation. This meant big changes to the Citi online experience. Seeing that the Citi F/I service was not meeting expectations and was costing too much for the company to continue, Parsells took over the helm to re-vamp the online experience.
New pure-play banks like E-Trade Bank and NetBank, and traditional banks that were starting separate pure-play banking systems like Citi and BankOne.
They also did not like to go into branches and made choices primarily by price.
Price-based shoppers are only looking for the best deal not much money to be made there.
Wow...
After only 5 weeks on the market, the Citibank Online service was ranked number 1! Back when Parsells was first hired (when John Reed was in charge), Direct Access was number 9 in the Gomez ratings, and Citi F/I was rated all the way down at number 17. By completely revamping, and combining these two services in different ways to form Citibank Online, operating costs were dropped by 50% and new account acquisition was up by 50% as compared to 1999.
Cross-sell opportunities: For different services like direct deposit and online bill pay. Incentives to sign up for these services.
Cross-sell opportunities: For different services like direct deposit and online bill pay. Incentives to sign up for these services.
Even though they're number one and are doing well, they could perhaps do a few things to help them keep this position and ensure that competitors don't overtake them.
Any Suggestions?
Value vs. Price Citibank Online has traditionally used the value play model more than the lowest cost provider model offered by other internet only banks. They should continue to do so, but in doing that they also need to distinguish their products and services from everyone else's who might have a lower price.
If Citibank Online wants to have the best product/service and keep their #1 rating, they'll need to have a good price to charge and justify that price by providing superior product and customer service. Lowest price does not mean best deal.
However, they do not want to over-charge either.
Any Suggestions?
Trust How do they get trust from their customers, and more importantly, how do they maintain it? It's not hard for them. They've got a reputation as a bank that's been around for a while with many customers, and they also have the physical presence to back them up. People nowadays still like to have a building they can go to where their money is at, and have an actual personality (teller) behind the counter. Eventually I believe online banking will become as commonly accepted as the ATM is today, and it is already starting to be come commonplace.
Any Suggestions?
Emerging Models Hybrid Banks In my opinion, hybrid banks do not pose as much of a threat to Citibank Online. Citi has a reputation as a great bank both traditionally, and online. Hybrid banks are basically just pure-plays who are trying to meet customer needs for a physical presence. This is great, and I'm sure it will probably work well, but not to compete with Citi. Let's say you need access to a physical location, who do you go to? A teller / officer at Citibank who knows about the business, or some average Joe at the UPS store? Plus, Citibank Online is rated number 1, and has the same features and benefits that rival that of the pureplays. So really, there might not be much competition.
Any Suggestions?
Innovation
I can see traditional banks with a strong online presence growing rapidly. Citi could do a few things to successfully continue to grow, from small to big. A new innovation: Citibank could start up its own online funds transfer site to compete with PayPal. This service would not be tied to any Citi account or account holder. This would be something that would make it easy for people to move money around, transferring funds in and out of accounts with other banks to different people, doing credit card transactions, etc, the same way as PayPal. Citi could partner with big companies such as PayPal did with eBay, to provide secure payment/money receipt methods without having to give out any numbers.
Big to Small
Innovation
Other ways Citi could grow is by opening more physical branches. More physical branches means more Citibank Online customers = more growth. Even something as simple as online E-statements sent right to customers email. This way, lots of money can be saved on paper, postage, and office supplies. Citi could use this extra money to expand even more.
THE END!
Let's high-tail it out of here