Submitted to


Sir Shahzad
Submitted by:

Qasim Ghafoor 10348 Ali Haider 10338 Waqas Manzoor 10343 Ali Nasir 10316 M. Ali khan 10304

Executive Summary
From since 1963, Citibank serving its customers by providing them quality products and services which are designed in a way that fulfills customers needs and requirements conveniently. In service from last 44 years, Citibank operates in Pakistan through its seven branches located in five major cities Karachi (3), Islamabad (1), Rawalpindi (1), Lahore (1), and Faisalabad (1). The banks head office is in Karachi. Bank carry out its operation through many departments such as operations department, collection department, citiphone services, merchants, and CIU. Operation department consist of card operations and banking operations and handles the receipts and payment of cheques with help of NIFT. Collection department consist of front end, mid range, and hard core and responsible to ensure the payment from the customers. Citiphone is a 24- hour’s service and handles the flow of the traffic of customer’s different queries regarding the bank products and services and also process the problem of the customers. Merchant department deals with POS, responsible to increase the outlets for Citi credit cards, receipts and payments to these merchants, and maintaining the good relationship with merchants. CIU or credit initiating unit verify all the applications received by bank for its products. Citibank is the multinational organization with multi-skills and multiculture peoples. Bank is well aware of that by investing in its people is the only way of obtaining the desired results. To take care of its employees bank has complete HR department in Karachi and Lahore. HR activities include recruitment, selection, performance appraisal, and performance based incentive system etc. In the present scenario of hard economic conditions and tough competition bank still able to earn profit after tax of Rs. 1064 million. Banks assets, deposits, advances, and equity are Rs.62148 million, Rs. 40838 million, Rs.25657 million, and Rs.6826 million respectively in 2002. Citibank offers the wide range of products and services such as credit card (gold, silver, and co-branding) loans (personal and home loans), car financing, and banking (citigold, local currency account, and foreign currency account). The major competitors of Citibank are SCB and ABN Amro. Bank operates successfully with limited number of branches is only due to the advance technology used by the bank i-e database communication system. In short, Citibank is serving Pakistani customers from since 1963 successfully and proven itself as the most prestigious and successful bank in the industry with its unique products and services.

Citigroup Inc. is a diversified global financial services holding company whose businesses provide a broad range of financial services to consumer and corporate customers with some 200 million customer accounts in six continents and more than 100 countries and territories, dates back to the history of Citibank, which began in 1812; Travelers, since 1864; Smith Barney, founded in 1873; and Banamex, which was formed in 1884 as a result of the merger of Banco Nacional Mexicano and Banco Mercantil Mexicano. Other major brand names under Citigroup's trademark red umbrella include Citi Cards, CitiFinancial, CitiMortgage, CitiInsurance, Primerica, Diners Club, Citigroup Global Corporate and Investment Bank, Citigroup Asset Management, The Citigroup Private Bank and CitiCapital. Below are brief descriptions of many of the most significant business activities.

To be a unique global bank and the leading regional consumer bank across Asia Pacific and Middle East dedicated to our customers, financially strong, consistent committed to the staff and their development, and delivering sustained superior performance.

Citigroup Global Consumer Group
The Citigroup Global Consumer Group businesses comprise the financial service sector's most diverse consumer product offerings - banking services, credit cards, loans and insurance. It also offers industry-leading advanced technology, a strong worldwide presence and a powerful global franchise in Citibank.

Citigroup Global Investment Management
Citigroup Asset Management provides investment management and related services to a broad spectrum of clients around the world, from beginning investors to wealthy individuals to large institutions, both public and private. It boasts one of the most impressive research teams on Wall Street and some of the most well-known brands in money management Smith Barney, Salomon Brothers and Citibank. The Citigroup Private Bank offers boutique service to its clientele while, at the same time, being backed by the full power of Citigroup. With offices in 59 cities around the world, it is one of the world's most global private banks. Global Retirement Services provides for the retirement and pension needs of clients around the world.

Citigroup International
Citigroup, principally through Citibank, has a long and unrivaled history as a provider of financial services throughout the world. Its global footprint includes more than 100 countries in North and South America; Asia and the Pacific; Western, Central, and Eastern Europe; the Middle East; and Africa. It offers customers personal service and the advantages of a local bank, while its global platform allows introducing a continuous stream of new and innovative products quickly and more cost-effectively than competitors. Its banking, lending, investment and insurance services serve the needs of individual consumers. Citibank is the leading provider of credit and charge cards, such as MasterCard, VISA, and private label throughout the emerging markets, and it has one of the largest networks of ATMs. Its full range of financial services products serve the needs of small and large corporations, governments, and institutional and individual investors, including a full range of treasury, foreign exchange, and financial advisory services.

Citibank in Pakistan
Citigroup started its activities in Pakistan in July 22, 1961 by establishing Citibank in Karachi. Now it operates in 6-major cities of Pakistan such as Karachi (2 branches), Lahore (1 branch), Faisalabad (1 branch), Islamabad, (1 branch) and, Rawalpindi (1 branch) with its seven branches. Citibank Islamabad involves in: • • Corporate banking Consumer banking.

Services of Citibank

The objectives of launching Citibank Online were
1) Extend its network and overcome the limited branch situation. 2) Achieve savings in CitiPhone/Branches’ operating costs by diverting customers to the Internet. Citibank Online has one of the lowest “costs per interaction” as compared to the ATM, phone banking or branch banking. It contributes immensely as part of the Strategic Cost Management initiatives the bank is implementing without compromising on the quality of service. According to an online banking report published by Ernst & Young, the transaction costs of the various banking channels are as follows: • • • • • • Branch $1.07 Call Centre (human) $0.85 Automated Response System (AVR) $0.44 Automated Teller Machine $0.27 Dialup PC banking 1.5 Cent Internet Banking 1 Cent

3) Meet the increased consumer demand for quick and secure banking solutions, anywhere, any time on any device; this is important in staying ahead of competition. 4) Enhance the brand imagery and values in the mind of the customers and the respects by owning this channel especially that Citibank is seen to be innovative and ahead of most other banks in terms of technology and product development. 5) Create another arm for deepening customer relationships through cross sell and acquisitions of new customers.

Functionalities of CitiBank for lock in their customer and lock out their competitors
Products and services of CITIBANK The following are various products of CITIBANK. They are 1. Citi Konto: Do you expect that your bank should work for you and not the other way around? Become one of our active clients and we will show you that we can meet your expectations. Citi Konto is a unique solution for managing your personal finances. It allows you to avoid unreasonable charges for most common banking services which Citibank provides for free within one advantageous fee.

2. Term Deposit: If you want to have higher interest rates and can afford not to have them immediately available Citibank term deposits are here for you. Citibank time deposits offer wide range of choices and flexibility. See for yourself! 3. CitiGold Wealth Management: Those excellent banking services, who have demanding life style and who knows the true value of their time and money. 4. Investments: Citibank offers its clients the possibility to invest their financial assets in mutual funds on foreign financial markets. We cooperate with the investment companies ING , MFS Meridian Funds and Pioneer Investments, which belong to the largest assets managers and the quality of their funds are among

the best in the world. We currently have more than 180 mutual funds in our offer. 5. Citi Credit Card: You can use the Citi Credit Card for everyday purchases, as well as for more expensive investments or for sudden and unexpected events (accidents in the home, damage to the car, medical care abroad). The Citi Credit Card is one of the safest payment cards on the market with the longest non-interest period. The following are services provided by CITIBANK: 1. Internet Banking: Citibank India offers you Internet Banking that is fast, easy and secure. Discover the convenience of online banking and secure online bill payments; with an Instant IPIN (Internet Password). 2. Get Credit card & Bank Statement on E-mail: Do your bit for the environment! By availing of the Statement on E-mail service, you have the flexibility of receiving your Credit Card/ Bank Account Statement, wherever you are.

3. Bill Pay: Discover a Simple, Secure and Convenient way to pay all your Utility Bills at Citibank Online. Pay your Mobile, Landline, Electricity, Water and Insurance payments online using Citibank Bill Pay. 4. Electronic Clearance Service: You don’t need to issue a cheque every month towards the payment of your Citibank Card dues. 5. Credit Shield Plus: Free look privilege for the first 15 days from the date of receipt of your Policy Summary

E-Business Model Citibank Online is considered as a standard Business to Consumer approach, the e-business model Citibank is using can be classified as “Merchant”.

Without the intervention of the AVR, ATM or CitiPhone Officers, a Citibank customer can access and operate all his relationships with Citibank at a click of mouse in complete privacy. In doing so, Citibank is balancing between security and accessibility of information leveraging on a robust e-banking service available within Citigroup. The three elements of the business model; value stream, revenue stream and logistics stream are complementing each other in this specific case. Citibank was certainly focusing on adding value to its customers by offering unmatched level of service and security. Its internal logistics were aligned towards a

single objective; launching a powerful service to its customers to complement its e-business strategy overall. Revenues after a period of time started flowing too, making the investment worthwhile.

Evaluation of E-business strategy and model
There are many ways of evaluating the success of the e-business model and e-business strategies of Citibank, one of which is looking at the financials for the performance of the service for the past four years. Ms. Sarah Hussain, Web Administrator at Citibank says “The results of the service represented in the information management system reports covering the performance of Citibank Online from 2001 to 2004 are very satisfactory and have met the management’s expectations”

Number of active Citibank Online customers

Above Table shows that the number of active users increased from 2% in the second year of launch to 6% in 2004, a healthy gradual increase. The transaction values increased too indicating that customers are feeling more comfortable now managing their funds on the Internet. This is as a result of the heavy investment in promoting and educating the customers on the gained benefits of using this service. Citibank invested around $350,000 towards the marketing budget in the first year of the launch. New accounts opened through Citibank Online

Citibank Online is proving to be a successful acquisition and revenue-generating channel, despite the fact that the management did not expect any revenues to be generated for the first three years of the launch. The deployment of the program to Citibank UAE, played a very important role in gaining those revenues, as Citibank UAE did not fund the development work, there were only a couple of adjustments made to the service to suit the UAE requirements. According to Timmers (1999) there are two dimensions of analyzing the e-business model: 1. The degree of innovation: Citibank is excelling in building and maintaining the competitive advantage in the Internet era, all functionalities offered were well studied and executed in a way where matching them is indeed a difficult task. Flexibility is built in the system for further enhancements and additions. 2. The extent to which the new functions are integrated within the business model The functionalities added fit perfectly with the e-business strategy and business model opted. They contribute directly towards meeting the objectives.

Technology Analysis
The computer technology plays important role almost in every sector of business. It completely change the traditional way of working. Thus,

computer technology also plays a vital rule in banking industry and now banks are competing through technology because they took edge on others by providing efficient services through the adoption of technology; that includes ATMs, Swift transfers, Online banking, Phone banking, online processing of applications and etc. Technological advancement is life for foreign banks because this is the only way of survival for foreign banks due to the limited branch networks.

Technology Used:

The database communication system is used in the Citibank for daily operations which is directly run, control and supervised by the Citibank Asia Pacific headquarter in Singapore. However there is proper technology department to look after the maintenance of all the systems and responsible for the smooth working.


As all the banks aware well of the magic of technology therefore, in order to retain the competitive edge bank always need to be innovative. To be the leader in innovation soon Citibank provides its clients online access to his/her account by introducing the “My CITI” account. Through this, client can access their account through their computers or laptop and check the current situation etc.

TECHNOLOGIES FOR LOCK IN THEIR CUSTOMER AND LOCK OUT THEIR COMPETITOR: (In-House or Outsourced?) The different levels of complexity associated with certain areas involving security, operations, planning, and monitoring have caused many national banks to outsource all or parts of their Internet banking operations. Banks should periodically reassess their sources of technology support to determine whether a given solution continues to fit their business plan and is flexible enough to meet anticipated future needs. Regardless of whether technology services are provided in-house or through a third-party servicer, national banks need to have a strong link between their technology provider and their strategic planning process. This will enable the bank to link new products and services with the existing technology and product mix. There are pros and cons to offering technology-based products and services in-house versus contracting with a vendor. Larger national banks with substantial resources may choose to purchase computer hardware and operating systems and/or develop the necessary application software in-house. This option

may provide the greatest flexibility to customize product offerings. Other banks may choose to purchase a “turnkey” system from a vendor. In this arrangement the vendor typically provides the hardware, operating systems, and applications software necessary to enable the bank to offer the particular product or service to its customers. The vendor will typically provide the service and maintenance for the turnkey system. A variation is to outsource the service. Using this option, national banks contract with a vendor to operate their Internet banking Web sites at the vendor’s location. This option may be especially well suited for banks that do not have the technical expertise to develop this service in-house. However, such banks need to place additional emphasis on their due diligence to ensure that security is not compromised. Several companies are responding to the developing markets for Web pages, Internet banking applications, and bill presentment and payment services. Although many companies in this market are prosperous and well managed, some are start-up companies with unproven products, services, or track records. National banks need to perform due diligence before selecting a vendor to provide Internet banking services. They should have a formal service agreement with the vendor that clearly addresses the duties and responsibilities of the parties involved. National banks need to monitor their vendor’s operational performance, financial condition, and capability to stay current with evolving technologies. National banks typically fulfill their responsibility to assure their vendors have sound internal controls by obtaining internal or third-party audit reports. Examiners should refer to the IS Handbook for a complete discussion of outsourcing issues. Whatever the source of Internet banking technology, products, and services, it is important for the national bank to have personnel with an appropriate level of specialized expertise, consistent with risk, to monitor and manage the business.

Citibank uses well secured technology for its Online Banking. It uses SSL Encryption Algorithm for its transactions. A Payment Gateway is a system that passes Credit Card data, authorization requests, and authorization responses over the Internet using encryption technology. The secure Citibank Payment Gateway allows the Card member to conduct secure transactions on the Internet using the industry standard Secure Socket Layer (SSL) technology that enables 128-bit encryption of data transferred. Citibank has launched its application, Citi Mobile, in the US, their bank balance, pay bills and functions, from their mobile phone. innovative mobile banking allowing customers to access transfer funds, among other Soon it will launch in Pakistan.

The application combines the consumer need for convenient, on-the-go banking with advanced mobile technology that is compatible with more than 100 popular mobile devices, across major US wireless carriers. "Citibank prides itself on being at the forefront of technology and innovation and on providing a superior client experience," said Maura Markus, president of Citibank North America. "Citi Mobile is an example of our commitment to providing our clients even more choices and convenience for their everyday banking, wherever they may be. For our clients, it's like having Citibank Online in the palm of their hand." Security has been a high priority in developing the application, the bank said. Citi Mobile transactions are equipped with 128-bit encryption, the same technology used on the bank's website. In addition, no personal information is stored on the phone and, if a handset is lost or stolen, Citi Mobile can be deactivated instantly. For added security, Citi Mobile only permits access to accounts from the phone that is registered with the service, and via a client's six-digit access code. Initially, Citi Mobile will be launched in California, and by midyear, all Citibank clients will be able to enroll in the service. A Spanish language version is also expected to be released later

this year. And after 1 and half year it will launch in Pakistan and other Asian countries. SECURITY: Citibank is committed to provide a safe and secure online banking experience. Check out the various initiatives that Citibank has adopted to safeguard your online banking sessions. Also explore how you can remain safe by adopting simple safety measures.

1. 1.1. Unique Internet Password (IPIN): Your security is governed by your Unique Secure IPIN (Internet to select your IPIN online, you will have to verify your personal information and generate an Online Authorization Code (OAC) that will be sent to your Mobile phone/E-mail address. You will then have to reconfirm the details and select your IPIN. Password). 1.2. Citibank Online Security Measures: Protecting you and providing a secure environment is a top priority for Citibank. Some of the measures are: 1.3. Secured login • All information passed on between Citibank and your personal computer is "scrambled" and "reassembled" using 128-bit encryption, the highest level of encryption commercially available. • You can access your account by using only the Citibankissued Card number and PIN/password. You have to enter the Internet Password (IPIN) every time you login to Citibank Online.

1.4. Automatic time out • Once logged in to Citibank Online, if there is no activity for 5 minutes, your secured Citibank Online session will be automatically terminated to help protect against unauthorized access. 1.5. Automatic lock out • If the Internet Password (IPIN) has been entered incorrectly six consecutive times, Citibank will lock any further online access to the accounts. • If you have been locked out of your accounts due to incorrect PIN/password entry, contact your local Citibank Customer Service Officer. 2. Digital Certificate from VeriSign • Digital Certificates provide you the evidence of the server's authenticity which safeguards users from trusting unauthorized sites and allows the session to be encrypted. • This is provided by a third party, the Certification Authority, which in this case is VeriSign.
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You will see a 'closed lock' icon at the bottom of the Internet Banking screen. Clicking on the lock will allow you to see the VeriSign Certificate authenticating the site.

1 Execution 1.1 The aspects to be reviewed and the review process should be chosen by taking into account the intended scope and objective of the review as well as the approach defined as part of the planning process. 1.2 In general, in gathering, analysing and interpreting the Internet banking environment, a study should be made of available documentation, such as bank regulations about Internet banking, Internet law, privacy law, web banking system documentation and use of the Internet banking solution.

1.3 To identify any problems relating to the Internet banking area which have been noted previously and which may require followup, the IS auditor should review the following documents: • Previous examination reports • Follow-up activities • Work papers from previous examinations • Internal and external audit reports 1.4 The IS auditor should map the key processes—both automated as well as manual—relating to the Internet banking initiative/system. 1.5 The assessment of the core business risks (set out in 6.1) should include a critical evaluation of the Internet banking objectives, strategy and business model. 1.6 The IS auditor should then assess the probability that the risks identified pertaining to these processes (business as well as IS risks) will materialise together with their likely effect, and document the risks along with the controls, which mitigate these risks. 1.7 As part of the IS risk assessment, external IS threats should be evaluated depending on the nature of products offered by a bank and the external threats to be addressed. These threats include denial of service, unauthorized access to data, and unauthorized use of the computer equipment, which could arise from various sources such as casual hackers, competitors, alien governments, terrorists or disgruntled employees. 1.8 Depending on the nature of the pre- or post-implementation review, the IS auditor should test the significant processes in the test and or production environment to verify that the processes are functioning as intended. These tests include testing of balance inquiry, testing of bill presentation and payment and testing the security mechanisms using penetration testing. 1.9 In post implementation review the IS auditor should obtain, at least, an understanding of network mapping, network routing, systems and network security assessment, and internal and external intrusion.

1.10 Since the Internet banking solution is predominantly an information technology solution, it should meet the information criteria established in COBIT, as well as other relevant standards or regulations of the industry. The extent of compliance with the information criteria, standards and/or regulations and the effect of noncompliance should be analysed. 2 Aspects to Review 2.1 The following organizational aspects should be reviewed for whether: 1. Due diligence and risk analysis are performed before the bank conducts Internet banking activities 2. Due diligence and risk analysis are performed where crossborder activities are conducted 3. Internet banking is consistent with the bank’s overall mission, strategic goals and operating plans 4. Internet application is compliant with the defined and approved business model

Competitor Analysis
Following review of the nine foreign banks operating in Pakistan clears that Citibank is facing the hard time from two banks i-e Standard Chartered and ABN Amro.


Provisioning against non-performing loans affect the profitability of banks directly. As far as provisions are concerned, Citibank made the highest provision amounting to Rs 154 million followed by AGZ bank, ABN Amro, and HSBC RS.40 million, 16 million and 10 million respectively. SCB and MB have written back the provisions this year amounting to RS 49 million and Rs. 49 million respectively.


SCG with total deposits of Rs 57,804 million controls 33.43% per cent of the total deposits (172,867 million) made by all foreign banks, followed by Citibank and ABN Amro with 40,838 million or 23.62% and 34,696 million or 20% respectively. Out of the remaining banks only the AGZ bank has more than 10% share in deposits i-e 11.68%.While AGZ registered the highest growth in deposit of 20.8 percent, the banks experiencing major decline in deposits were CA bank (47.1%) and Deutsche Bank (32.4%). Citibank also reported the decline in deposits by (1.6%).


Six banks out of 9 have registered decline in advances. Citibank also reported decline in advances by (5.4%). The banks registering the growth in advances are AGZ, SCB, and ABN Amro by 28.4%, 10.9%, and 5.4% respectively.


However, when one looks at the profit before tax figures of these banks, SCB has earned the highest profit amounting to Rs 2594 million, followed by Citibank and ABN Amro amounting to Rs.2288 million and Rs. 1307 million.


SCB ranked 1st according to the banking survey of Pakistan with highest value of assets amounting to Rs. 82498cmillion, followed by the Citibank and ABN Amro with the assets amounting to Rs. 62148 million and 45,722 million respectively.


One of the criteria for evaluating the performance of commercial banks is return on average earning assets. On the basis of this, Citibank emerged to be the best for the year 2002. It improved from 3% to 3.7% followed by the MB, SCB, and ABN Amro with 3.5%, 3.1%, and 2.9% respectively.


Return on average equity is important for the head offices of these banks. Citibank has the largest equity of Rs 6826 million followed by SCB Rs.6312 million and ABN Amro Rs.3140 million. The ROE of the foreign banks for the two years 2005 and 2006 AGZ emerges the best bank as far as REO is concerned with 39.1%, followed by the ABN Amro, SCB, and Citibank with 34.5%, 28%, and 19.4% respectively.


Overall market share of foreign banks as per economic survey of Pakistan is 2.5% but the banks are claiming different shares. It is difficult for researchers to know the actual market share.


I spend whole of my six week internship period in the collection department which consist of Front End, Mid Range, and Hard Core. Following is the detail of my working in these sections: Front End • Making the low risk calls, the main purpose of which is to reminder the card customers about their dues. • Also I make the updating of records by using the different activity codes. • Verification of cash book of TC’s and FC’s • Check the cash entry that it is properly made in the cash register. • Receiving return cheques from cards operation. • Recording the entry of these cheques in the return cheques register. • Also make entry in the computer. • Inform card member about the return cheques. • Filing cheques in safe files. • In case, if cheque is received back by the client again update the system about reversal. • Passed the client instruction to respective department. • Verification of the field visit sheet and also check visits updation in system. Mid Range • Handling of return cheques. • Handling of return mails (statements). • Incase of change in address update in system. • Visited clients with FC’s. • Filling of cash slips in MIS. Hard Core • Printing of cancellation advice. • Dispatching of cancellation advice. • Handling of return cheques. • Maintaining the records of accounts transfer for legal proceeding.


Citibank is well organized bank and operate efficiently in this competitive environment so; it is difficult for me to identify only one main problem. But nothing is perfect in this world there is always a room for improvement. According to my limited knowledge improvement can be made in following areas: • Behavioral problems among permanent and contractual employees.

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Job security. Lack of participation from the employees As major commission is performance based therefore employee can do everything to get their commission. Senior employees ask juniors for their personal work during the office hours. Break down of system also disturb the banking operation. As there is performance base incentive system employees are under pressure (Stress) to perform best. In case of failure their earning will be affected.

Citibank is one of the oldest foreign banks operated in Pakistan from last 44 years prove itself as the best and most prestigious bank in the banking industry. Due to low interest rate prevailing in the economy bank shifted its emphasis towards consumer banking. Bank has the effective advance technology which enhances its efficiency of operations. This technology also provides bank competitive edge over its competitors. Bank serves its customers by providing a wide range of quality products and services such as credit card, loans, car financing, e-card, banking accounts. Hospitality and personal banking is the distinct feature which prominent it among its competitors. Bank considers its employee as the real assets and no hesitate to invest in human capital. Bank has the efficient and competitive work force due to which it retains its position in the market. Bank cares for its employee not only by providing attractive compensation but also take the personal care of its employees. In short, Citibank is the multinational bank with diversified strategies of delighting its customers by providing the modern globally accepted products and services which suits their financial needs conveniently.

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