Case 17 Citibank's E-Business Strategy for Global Corporate Banking

8/18/2019 Case 17 Citibank's E-Business Strategy for Global Corporate Banking

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Dr. Minyi Huang li Farhoomand

he University of Hong Kong

In 2000, in response to intense competi t ion and the

dot-c om boom, Citibank made a serious push to deliver

integrated so lutions that enabled its corporate customers

to con duc t business online. Citibank's e-business strategy

( connect, transform, and extend) was to Web-enable

its core services, develop integrated solutions, an d reach

new markets. Citibank aimed to build a single Web-

enabled platform for all customers with similar needs.

Following the success of CitiDirect, a c orpo rate banking

platform which was developed in 2000 and strengthened

in 2003, Citiban k started to develop Treasury Vision as a

replacement to suit the changing marketplace.

W he n developing its e-business, Citibank faced con-

stant challenges in serving corporate customers with

diverse needs. Sop histicated clients, such as multinational

companies (MNCs), required custom-built host-to-host

product interfaces. Other customers, such as small and

mediu m-sized enterprises (SMEs), were m ore conserva-

tive an d not ready for Web-based solutions. Meanwhile,

Citibank was under increasing pressure to cut costs and

improv e efficiency. Following the outcry over su bprime

mortgag es in Oc tobe r 2007, Citibank faced a very tough

business environment.

How could Citibank build a flexible and agile e-

business product that could capture its clients' total cash-

man ageme nt an d trade-service needs, yet still lower costs

and improv e efficiency? Given Citibank's eno rmo us global

reach, how could it integrate Intern et initiatives nto its over-

all strategy and create sustainable competitive advantages?

Global Corporate anking at

~ i t ian

Citib ank was incorporated in 1812 as City Bank of New

York. The bank experienced several mergers after its

inception. The name Citibank N.A. was adopted in 1976.

Following its m erger with Travelers Grou p in 1998, th e

holding company changed its name to Citigroup Inc.

( Citigroup ). In 2006, Citigroup employed 325,000 staff

serving 200 million customers in over 100 countries an d

had an information technology expend iture of US$3,762

million.

Starting in the 1990s, Citibank's corporate bankin g

activities became m ore centralized, with m ore attention

focused on 1,400 large global corporations and institu-

tional investors.' Citibank transformed from a geogra-

phy-based organization into a multidimensional one.

Custom er needs became its first priority, while produ ct

types were given secon d p r i ~ r i t y . ~

By most me asures, Citib ank was th e most global U.S.

bank. In 1997, Citibank was also on e of the most profit-

able banks in the United States, with an annual profit

of US3.59 billion, of which global corporate banking

accounted for

US$2.56

billion. Citibank's global cor-

porate banking business continued its healthy growth.

The bank's Cash and Trade service was a core product

offered to corporate customers. By 2000, Citibank's

Cash and T rade division had already exceeded US$1 tril-

lion in financial transactions for customers and coun-

terparts around the world daily. The se included foreign

exchange transactions, equities, deposits, settlements

of trade transactions, and payment of insurance poli-

cies. In 2006, the income from its global corporate and

investment banking activities reached

U S 7 . 1 2 7

billion,

a three percent increase over 2005.3

Citibank's target corporate client base included

MNCs, financial institutions, go vernm ent sectors, local

corporations, an d SMEs. Citibank differentiated itself

from other banks through customer service by offer-

ing telephone hotl ines, relat ionship managers who

understood clients' needs, and prod uct consultants who

Dr. Minyi Huang prepared this updated version of the case with the same title published in 2001 under the su pe ~i si on f Professor Julie

H

Yu and Professor Ali

Farhoomand for class d~scuss~on.his case is not intended t o show effective or ineffective handling of decls~on r business processes.

2008

by The Asla Case Research Centre, The University of Hong Kong. No part o f this publ~ catl onmay be reproduced or transmitted in any form or b y any

means-elect ronic, rnechan~cal,photocopy ing, recording, or otherwise Including the Internet)-w~thout the permission of he Un~versity f Hong Kong.


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provided service expertise. Most importantly, Citibank

made continuous investment in technology to support

both the front-end and back-end electronic banking

system.

For corporate customers, Citibank provided a full

range of financial services, except for investment ba nk-

ing services in t he United States. Th e core produ cts were

broadly grouped into three ~ a t e g o r i e s : ~

Transaction services, such as cash management,

trade, and c ustod y services

Corpo rate finance services, such as working-capital

finance, trade finance, and asset-based financing

Treasury market services, such as hedging and

foreign exchange

Citibank aimed to make the organization accessible to

its corporate custo me rs by using its unified platform an d

group-w ide expertise. It used a team coverage app roach ,

which allowed Citigro up to work closely with each func -

tion in a client s organization.

ash Management5

The main focus of cash management was to find ways

to move money around in the most eff icient man-

ner possible

in o rd er to meet customers requirements.

Two crucial aspect s of a corpo rate treasurer s needs

were accounts payable and accounts receivable. In 2 000,

Citibank focused on developing solutions to address

three process areas: accounts receivable process man-

agement, accounts payable process management, and

Exhibit 1 Citibank s Treasury and Cash

Management Objectives

liquidity m anagement (Exhibit

1 .

By 2007, after con-

,

tinuo us developm ents, Citibank s c.ash m anagem ent

products included Web-enabled payment and receiv-

3

ables solutions, vendor finan cing, comm ercial card so lu-

tions, an d liquidity prod ucts designed to help custom ers

to reduce financing costs an d achieve greater returns on

assets.

m

r

To help customers make payments, WorldLink

Paym ent Services had b een Citibank s cross-bo rder

banking solution for more than20years.Using WorldLink

Payment Services, paym ents can be made in mo re than

135

currencies through a range of payment options

9

including cash, cross-border A utomated Clearing House

(ACH)6,checks, or electro nic funds transfers. There was

S

no need for multiple foreign currency accounts, and

transactions were protected by sophisticated encryp-

tion technologies, access restrictions, and authentica-

tion procedu res. Citibank s QuikR emit Service, a newer

service, offered a robust software platform and global

distribution network to process fund transfers effort-

lessly acros s borders. Qu ikR em it allowed corporate cus -

tomers to offer both in-branch and Web-based money

transfers to their own custom ers.

In term s of receiving paymen ts, Citibank s Cu stom er

Init iated Payments offered an integrated solution

enabling corporate customers to offer Web an d telephone

paym ent capabilities to th eir clients. Corpo rate custo m-

ers were able to develop a tailor-made Internet pay ment

application hosted on the Citibank Customer Initiated

Payments system that provided one-time or automated

-

AutomateIMaintain

Supplier Relationship

Accounts Receivable

Process

Management

Integration

Invoice Matching

. , . .

,

. , . . - Outsource Deliveryo


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recurring payme nt initiation. Th is solution also included

a touch-tone telephone payment application for one -tim e

payme nt initiation as well as a custom er service console

to enable payment initiation by an operator.

Citibank's comm ercial cards offered a wide array

of Web-based program management tools designed to

streamline paym ent, reporting, sp en d analysis, global data

consolidation, and o the r critical day-to-day processes. In

Asia, commercial cards enabled corporate customers to

receive consolidated spend data for all countries within

Asia which could be easily leveraged during supplier

negotiations. Cor pora te custom ers could also work with

a single Citibank sales manager responsible for prog ram

impleme ntation a cross all participating Asian countries.

Therefore, clients could benefit from consistency in

products, delivery, and services. By the end of 2007,

.

Citibank remained the only bankca rd issuer that was able

t o e liver local -currency and local- language programs to

clients worldwide by using its own proprietary systems

and cu stomer service operations.

Citibank also offered an array of integrated invest-

ment opt ions through mult iple channels , including

automatic orders, branc h services, an d online services.

Through its network of Liquidity Desks, Citibank pro-

vided a central point of contact to facilitate investment

transactions in every major region. Citibank's Online

Investments was a global, secure, Web-based system

allowing customers to access a variety of short-term

investments using its award-winning electronic bank-

ing platform, CitiDirect Online Banking (which was

later replaced by Treasury Vision) allowed custo mer s to

actively manage their short-term investment portfolios

convenien tly an d efficiently.

Citibank also offered Target Balancing and Notional

Pooling as integrated parts of its Global Liquidity and

Investments product suite. Target Balancing was an

automated process that concentrated end-of-day bal-

ances from a source account to a target account, while

these services were maintained in-country, regionally,

and global ly, and encompassed structures operat ing

within a single branch or multiple branches throughout

the Citibank network. Notional Pooling was ideal for cor-

por'ltions ~\ -it h ecentralized ope rational structures that

\vanted to preserve the au tonom y of their subsidiaries

and accounts. Pool participant accounts in a single cur-

rency were aggregated for interest compensation pur-

poses. Funds w ere n ot physically moved, but were instead

notionally combined. Notional Pooling enabled corpo-

rate customers to minimize interest expenses by offsetting

debit and credit positions while preserving autonomy,

control, and record-keeping. Cus tome rs were also able to

benefit from offsetting without movement of funds, auto-

mating interest reallocation, reducing operating expenses,

and concentrating balances. Notional Pooling was used

in conjunction with Target Balancing and Automated

Investments to enable corpora te custom ers t o fully realize

the benefits of a global liquidity structu re.

Securities and Fund Services

By 2008, Citibank had developed the financial indus-

try's largest proprietary network, covering 9 markets

with more than US 12.5 trillion in assets under cus-

tody. Citibank offered international securities trading

and investment services to intermediaries. Citibank's

,

Agency and Trust could provide sup port to help issuers

raise short-, medium -, an d long-term de bts in all major

markets. Additionally, Citibank's D epo sitary Receipts

(DR) could provide a wide range of pre- and post-DR

program services.

Trade Services and Finances

Back in 2000, Citibank already offered Trade Finance,

Trade Services, and T ra de Supp ort Services. These prod-

uct offerings covered the banking service and financing

needs of customers who conducted import or export

trade transactions (Exhibit

2).

In 2007, Citibank wa s able to offer efficient services

to both importers a nd exporters due to its global reach

and ability to offer secure transactions. For importers,

Citibank also provided an array of produ cts to help con-

duct , monitor, and control internat ional commercial

transactions as well as mitigate the associated risks.

Citibank's global electronic banking service was a

comprehensive system for initiating transactions and

managing financial data activities. Cus tome rs could access

information and manage all their banlung transactions,

trade services, cash management, and foreign exchange

data from the multiple locations arou nd t he world where

they conducted their business. They could control the

entire trade process, including advising and confirming

letters of credit, establishing direct export collections,

initiating and traclun g payments, retrieving timely status

reports, communicating via an online customer service

facility, retrieving real-time data worldw ide, a nd custorn-

izing reports using da ta from different systems.

Pricing nd Customer Service

Cit ibank set s tan dar d price for each service, but

price discrimination was discretionary based on client

volume and value. While some banks competed on

price, Cit ibank emphasized customer service (e.g. ,

response t ime, technology and sup por t) , which gave

cus tomers more conf idence . C i t ibank had moved

beyond traditional boundaries of banlung services by

taking over some of the back-office functions of its

customers. Customers could move away from the paper-

based, labor-intensive payment and collection process,

and instead focus resources on their core business of


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xhibit Citibank s Trade Service Products

Letter of Credit

Issuance

Standby Letters of

CreditIGuarantees

Confirming Letters Advising Letters

of Credit of Credit

Risk Mitigation

Negotiation Export

Letters of Credit

generating sales and revenue. The value to Citibank in

offering outso urcin g services was to lock in its corp orate

customers; when a customer outsourced all of its back-

end processes to Citibank, Citibank not only secured

all the businesses from the customer, but also gained

a deeper relat ionship with the customer. Managing

processes for a large numb er of customers also provided

Ci'tibank with econom ies of scale.

W e have th e econom y of scale and it is viable for us to d o

all the bac k-en d processes-because th e mor e processes

we do for mo re customers the lower the un it cost. So

our

strategy is to get ah ma ny outsourcing customers a s we

can and

by

providing th e outsourcing we get the total

wallet of the client.

era of tough competition, banks could not simply use

head-coun t re ductio n and belt-tightening efforts an d

needed to find ways to increase operating efficiency while

maintaining or ev en impro ving services to customers.

Like most other businesses, banks need to increase

their profit margins. Net interest margins were falling

and fee income grow th did not increase as expected. For

example, for the 70 largest Europea n banks, net inter-

est margins fell from 2 percent in 2004 to about

1 8

per-

cent in 2006.12 Meanw hile, com petition kept charges

for credit cards relatively low; bank customers did not

em bra ce brokerage or life insurance services. Moreov er,

regulators had made an effort to cap fees or require

greater transparency of bank charges.

Between 2005 and 2006, Citigroup's revenue grew

- C A R O L IN EW O N G ,H E A DO E - B U S IN E S SR O U P

8 percent; however, its operational expenses grew by

C A SH R A D E ) , I T I B A N K ONGK O N G ~

nearly 5 percent. Therefore, in April

2007,

Cit ibank

Citibank also used tech nology to provide custom ers with

better services at lower costs.10 n 2006, for example,

i t invested in an electronic commun icat ions network

that provided state-of-the-art technology for immediate

access to liquidity.

announced an overhaul of i ts IT operat ions and cut

17,000 positions in ord er to save the company mo re th an

US$10 billion over th e next three years. Charles Prince,

then the company's chairman and chief executive, said

that th e goal was to identify and eliminate organiza-

tional, technology, and administrative costs that do not

contribute to our ability to efficiently deliver products

A

hanging Global Environment

and services to our clients. 13

Moreover, as a resul t of the subprime mortgage

- -

Banks are always under the pressure of revenue and

crisis in the Unite d States, a credit crunch eme rged

earnings grow th to intensify cost-reduction efforts.

I n

an

in October 2007. Th e subprime market was focused o n


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providing loan s to those with limited o r poor cred it his-

.

tories. ~ ; r i n ~he U.S. housing boo m between 2000 and

2006, this ma rket expanded significantly, but a series

of interest rate increases in 2006 and 2007 mearit that

many subprime borrowers could no longer afford their

monthly payments, causing them to default on loans.

In Nov emb er 2007, Prince had t o resign after th e full

extent of C itigroup's subprime mortgage losses began to

emerge. Vikra m Pandit took up the top job at Citigroup

r

in December 2007. Then, on Ja nuar y 15,2008, Citigroup

announced a US$9.83 billion net loss for the last quar-

ter of 2007. Pandit explained that this loss was due to

.

a US$18.1 billion exposure to bad mortgage debt and

was clearly unacceptable. Th e gro up anno unce d that

revenues dur ing the fourth qu arter ha d fallen 70 percent

from a year earlier to US$7.2 b illion.

k

Smarter and Tougher Customers

Citibank developed expertise and had specific coverage

models to serve different market segments. However,

as more of Citibank's clients expa nded their businesses

globally and became e-enabled, it became necessary for

Citibank to shift to e-space. In particular, corporations

that historically dealt largely throu gh wholesale chann els

had found tha t the Internet allowed the m to sell directly

to customers. Sophisticated corporate customers began

to look for a n additional range of services. They wanted to

collect paym ents online an d have access to more efficient

Web-enabled financial pr oc e~ se s. '~

Middle mark ets were also driving the growing need

for Intern et ba nking capabilities. A study by Greenw ich

Associates in M ay-June 2001 showed that over half of

the middle-market companies in the United States and

Canada were using their financial institutions' online

banking facilities more often. Nearly 50 percent of

respondents said online offerings represented an impo r-

tant com pone nt of their bank ing relationships, an d cash

management had the steepest gain in usage among mid-

size companies.16 Banks were th erefo re com pelled to

identify what companies were looking for an d t o keep

up with the customers with whom they were supposed

to develop consultative relationships.

he

Business-to-Business BZB) Market

Sophisticated clients were looking for ways to stream line

and improve their traditional payment processes. They

dem ande d electronic invoicing, autom atic application of

payments to accounts receivable, online payment guar-

antees, and non-repudiation of transactions that could

be enabled by digital receipts stored i n archives. O n the

payment side of transactions, businesses required multi-

currency payment management and payment aggrega-

tion by invoice and currency. Most companies were

interested in technological solutions that allowed them

to avoid paper disputes, which m eant that th e information

flowing with a payment was deemed to be as important

as the payment itself.

TowerGroup, a research and consulting firm, pre-

dicted that payment activities would migrate to the

Internet and that there would be US 4 trillion in B2B

e-pa ym ent activities by 2010. Tow erGroup also reported

that i n 2000, mo re than 90 percent of all B2B payments

were made by check, with 7 percent occurring over the

autom ated clearinghouse (ACH ) network, a non-Internet

system designed to handle larg e payments, an d the rest

using fina ncial Electronic Data Interchange (EDI) services

such as Fedwire.l8 The majority of small businesses used

traditional payments such as checks; large companies

that use d ACH did not have th e complete data that were

necessary for a B2B payment. In addition to checks,

variou s paymen t methods w ere available, with clearance

time varying according to th e m ethod:

Notes and coins: Notes and coins paid into an

acco unt did not require clearing; they ha d no partic-

ular attraction for banks, especially in larg e volumes,

because they were a non-interest-bearing item.

Banker's draft: This was a check drawn on a bank.

Payme nt by banker's d raft was guaranteed.

Credit cards: Made by voucher or electronically,

voucher payments were processed in a way similar

to checks.

Special presentation of checks: This paym ent m ethod

was taken only in cases of extreme doubt about a

customer. For example, a payee company could ask

its bank to mace a special presentation of the check

by posting the check to the paying custome r's bank.

Transfers: Funds were transferred from one bank

acco unt to another on receipt of instructions (through

telephone, subsequently confirmed by writing, on

pape r, or sent by cable, telex, or a n electron ic process-

ing center) by the paying ban k to make th e payment.

B an k - t o -co rp o ra t e co n n ec t i v i t y was t h e b i g g es t

hurd le in enabl ing s t ra igh t - through process ing in

treasu ry- and cash-mana gement across borders . In

1999, corporate customers could access SWIFTNet20

to exchange confirmations with their banks through

Trea sury Cou nterparties. In 2002, access was enhan ced

by the Member Adminis t ra ted Closed User Croup,

where a compan y could join SWIFTNet i f a member

ban k sponsored i t. Though the re were no l imits on the

messages that the corporate customer co uld exchange

wi th the sponsor ing bank , the communicat ion was

l imited to the sponsoring bank and i t was expensive

and t roublesome for corporate customers to reach an

agreemen t with the banks.

Since the beginning of 2007, most large corporate

customers had begun using a new legal model for


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acces s i ng S WIF TNet : S t andard i zed C OR pora t e

Environment (SCORE). Using the SCORE model, a

corporate c ustom er could access all participating banks

with only on e agreement in place. SCORE also laid down

rules for the messages that could be sent within the

SCORE framework. Th e only exception was for FileAct

message, where the body of a FileAct message could

contain any type of messages, such as an EDIFACTZ1

o r IS0 2002222 ormat message. The introd uction of

SCORE was intended to m ake it easier, cheape r, and less

risky for corporate customers to switch between banks

because no technical or fo rm at changes were needed for

corporate customers in switching banks.23

Many banks openly adm itted that formats and con-

nectivity w ere n o longer a compe titive space but instead

a place for cooperation, using standards to reduce costs

for their customers as well as themselves. The compe-

tition would be in the value-added senices that banks

sold to customer^.^^

ompetition

Some MN Cs could not w ait for banks to develop Web -

enabled financial products, so they started building their

own systems and looking for ways to disintermediate

banks. Othe r corporat ions approached the banks an d

xhibit

3

The Main Trends in IC M in 2000 and 2008

.

announced their interest in part icipat ing in future

developments. New tech nology, however, required m ajor

investments in people, risk, and technological services

that some banks we re not ready to m ake. The banking

2

(7

indus try s t rend toward consol idat ion meant tha t

fewer banks were competing in the global transaction

services marketplace. Deutsche Bank and Citibask were

L .

two leading banks that invested hundreds of millions

of dollars in the infrastructure required to move and

monitor cash balances online. ABN AMRO was also

making a serious pu sh to develop its prod uct range.

In ear ly 2001, Deutsche Bank sought to outdo

n

i t s com pe t i t o r s by bu i l d i ng a g l oba l paym en t

system capable of accommodating many currencies,

t

languages, and local business pract ices through i ts

e-bills service. More large banks sought partnerships

to provide global business solutions. In international

cash management

(ICM),

companies ei ther partnered

with a lead bank th at pu t together a solut ion for them,

or deal t direct ly with local banks. The majori ty of

compan ies used a lead ba nk to provide a solut ion in

four ways: using correspondent banks, act ing as an

overlay bank, becoming a mem ber of a banking club,

o r bringing toge ther a network of s tandardized service

providers (Exhibit 3 .

Trends in

2000

The centralizat~on f cash management and the ~ntroduct~onf shared service centers continued in large companles and

were spread ~ngo med~um-s~zednd small companles

There was a

growlng acceptance of the need to outsource ICM operations

Comp an~es ere realizing that the company-bank rela t~onsh~pas more ~mportan than whether or not a bank could offer

Internet-based or e-commerce services.

Companies ~ncreas~nglyanted to understand and be comfortable w ~t h bank s e-commerce strategy before they were

ptepared t o award them bus~ness.

The use of cross-border zero-balance accounts grew much faster than no t~o nal oo l~ ng ecause many companles had

sophisticated in-house cash- and treasury-management systems to run them

There was a growing realization among some of t he major banks tha t a network of standardzed service-provider banks was

not always enough,

~

as also lmpcrtant t o have a local branch or branches in

countries

around the world

Banks were walk~ng way from the ICM bus~ness here ~thad ceased to be p rofta ble, producrng a growing understanding

and acceptance among large companles that banks needed to make reasonable returns, othe rw~sehe standard and quality

of servtces would inev~ tab ly uffer

As banks ICM products and memberships of local clear~ngs ecame s~m~la r,he key differentiator ~n he bus~ness ecame

dellvery

Source: D Danko,

J.

H Godwin & 5 R. Goldberg.

2002.

How to profit from new trends in treasury management, Journal

of

Corporate Accounting and Finance.

14(1) 3-10.

Trends in

2008

Banks and corporate treasurers were driving the move toward electronic payments ~norder to better integrate money and

information flows.

Corporate treasury was pushing t o Integrate the physical and financial supply chams, and there was a parallel convergence

~n nternat~ona lrade toward open-account, electronic f~nanual upply chams.

Corporate treasury was focusing on standard~zingprocesses and strengthening internal controls tn order t o create trans-

parency across a range of business activ~t~eso manage risk and ensure financial reporting integr~tyn compliance with

Sarbanes-Oxley25

Source: 5. Wilder,

2008.

The latest trends in N orth American

cash

management. JPMorgan Chase & Co.


7/13

c

Most Fortune 500 companies preferred Cit ibank

not because we re into the dot-corn business; we re here

,

when making in ternat ional e-payment%26 l though

because our clients want us to continue performing the

Citibank established itself as a str ong co ntender, technol-

basic bankin g unctions for them on th e web.

ogy companies competed heavily by using their techno-

- AROLINE

ONG,HE D F

E-BUSINESS ROUP

O

logical expertise and interests in providing new services.

u

CASH

TRADE),CITIBANK

ONG

KONG~O

Regulatory

crutiny

Risk management and legal compliance were priori -

ties for ban ks in 2008.27Regulators took an increasingly

cross-platform view of risk and the refor e expected ban ks

to increasingly connect exposures across channels and

payments, which put more pressure on bank architec-

.

tures where risk management was usually buried at

the platform level. For example, the implementation of

Base1 IIZs ncreased the pressure on inform ation system s

functions and encouraged banks to develop integrated

U

information systems strategies and consequently a me nd

their existing T infrastructure^.^^

Regulators were also more cautious about privacy

issues. Th ey expected ba nks to be able to identify specific

data breaches quickly in order to limit any damage as a

result of fraud. In addition, with the growing number

of nonbank processors in the marketplace who were

generat ing n um erous t ransact ions w ithin the bank ing

systems, regulators scrutinized third- party arrangem ents

much m ore closely to ensure that banks understood the

underlying comm ercial purpose an d en sure that a bank's

operations w ere not hijacked for frau dulent purposes.

Citibank's vision was to become the world's leading

e-bu siness enabler. It wanted to emp ow er local, regional,

and global customers and the business-to-business-

to-con sum er marketplace and provide solutions to help

them take advantage of the efficiencies and opportunities

created by e-comm erce. Citibank's e-business strategy to

con nect, transform an d extend was a means to deliver

on its vision.

Meanwhile, with technology investments in the

global financial service industry growing at a rate of

4.2 percent per year, Ci t ibank t r ied to manage the

overall costs of

T

investments . The plan announced

in April 2007 to overhaul

IT

operat ions included the

consolidation of data centers; better use of existing

technolog ies ; op t imizat ion of g lobal vo ice and

data networks; s tandardizat ion of i ts appl icat ion-

development processes; and vendor consolidation. As

Cit iban k stated, s implification an d s tandardizat ion

of Citibank's information technology platform will be

critical to increase efficiency and drive lower costs as

well as decrease time to market. 32

Citibank s E-Business Structure

Citibank s E-Business Strategy

In Ma rc h 2000, ~ i t i k r o u ~hief exe cutive Sanford W eill

-

W e are here t o serve o ur clients: whate ver o ur clients

announced the formation of the Internet Operat ion

want us to

do

we ll do it for them. We re into e-business Group, a high-level committee charged with spreading

Citibank s E-Business strategy3

its customers

Reach new markets,

new customers, and

new products

The Six Key Elements

of

Citibank s E-Business Strategy

Embed Citibank as t h e trusted

brand within comm unities

Build a netw ork of str ategic partners


8/13

xhibit Citibank's Glob al Transac tion Services Awards in Asia,

2 7

*

Best Custodian in Asia; Best Fund Administrayor in Asia (A sia Asset Manage ment)

Best Overall Cash Man agem ent Bank across all categories as vote d

by

corporations; Be st Electronic Banking P latform; Bes t

at Un derst andin g Business Strategies, Objectives, and Requirem ents as voted by financial institutions (Asiarnoney)

Best Transaction Bank in Asia; Best Cash Man agemen t Bank in Asia; Best Corporate Specialist in Asia TheAsset)

Best Cash Management Bank; Best CashManagement Solutions (FinanceAsia)

Asia's Best Investment Man agem ent Services; Best Corp orate /lnstitution al Internet B ank in Asia (G lob al Finance)

responsibility for Inte rne t activities more ev enly between

e-Citi, an in kb at or for Internet initiatives, and the bank s

business units. In April 2000, the group announced the

seco nd phase of Citigroup s Intern et activity, which

involved the creation of two units aimed at infusing

the Internet into all consumer and corporate bank-

ing activities: e-Consumer and e-Business. Both units

were intended to complement e-Citi.33In May 2000,

two new business units, e-Capital Markets and e-Asset

Management, were added.

Jorge Bermudez, executive vice-president and head

of Global Cash Manag ement and Tra de Services, was

appo inted to lead the e-Business unit.34 Bermudez s

e-Business unit was responsible for developing Internet

software for corporate clients setting up B2B electronic

commerce exchanges.

The new business units brought people from the

business lines together with people from the Internet

side of operations, which com bined resources and elimi-

nated duplication and competition. The new strategy

of forming high-level committees reversed the central-

ized approach that Citigroup had pursued under John

Reed, the driving force behind the form ation of e-Citi.35

Citigroup s new structu re involved traditional business

units in formulating Internet strategies and forming

xhibit 5 Citigroup Organizational Structure

'

committees to coordinate and synthesize an approach

that mirrored that of other banks.36

In 2002, Global Transaction Services was created as a

?.

4

division of Citibank s M arkets and Banking to integrate

Cash, Trade, and Treasury Services and Global Securities

Services. It offered integrated cash management, fund

2

services, securities services, trade services, and finance

to MNCs, financial institutions, and the public sector

around the w orld (Exhibit 5). The objective was to help

corporate customers gain greater control over financial

positions both locally and globally, increase efficiency,

and reduce costs.

Within just one year, Global Transaction Services

was already tapped by 95 percent of Fortune 500 corn-

panies and profits grew 38 percent. W ith a global reach

and local presence, Global Transaction Services had

assets and businesses in several countries and regions.

Its Internet-based cash management, electronic bill

payment and online statements, reporting and analyt-

i c ~ ,ecurities processing, and othe r capabilities enabled

corporate customers to re-engineer processes, manage

working capital more effectively, and improve straig ht-

through processing.

In 2006, Global Transaction Services already su p-

ported 65,000 clients, cleared an average of 752,000

MARKETS BANKING

SERVICES

GLOBAL

CONSUMER

CORPORATE

A N D

INVESTMENT

BANKING

GLOBAL

WEALTH

MANAGEMENT


9/13

secur i t ies t rades every week, and processed more

Ln

citibankls Alliance Strategy

Before 2000, Citibank had tried to excel at all facets

of e-business-a strategy that failed. The com pan y

invested millions of dollars and tried to specialize in

each area, including software development, systems

development, and front-end services; however, clients

and software technology were constantly changing and

Citibank was stru gglin g to keep pace with client needs.

By 2000, Citibank's strategy focused on alliances and

the use of its partne rs' strengths. Specifically, Citi ban k

par tnered wi th companies tha t had complementa ry

technology, infrastru cture, or access to markets. As Tom

Edgerton, he ad of alliance for Citiba nk e-business, said,

In the future, it won't be what your company can do,

but what the netw ork of companies you work with can

pr ~ v ide . ~ '

Citibank's key technology players included Oracle,

Commerce O n e Inc. , SAP

AG,

Wisdom Technologies,

and Bolero.net. In August 2000, four companies te am ed

up wi th Ci t ibank to form

FinancialSettlementMatrix

.corn, a company tha t connec ted buyers and se l le r s

in e -marke tplaces wi th payment process ing, c redi t ,

a nd o the r s e r v ic e s th r ough m ul t ip l e pa r t i c ipa t ing

b an ks a nd f in a nc ia l s er vi ce ~ o m p a n i e s . ~ ~itibank's

cha l lenge was managing the vendors and suppl ie r s

and en suring tha t they understood Citibank's strategy

and would no t exploit the bank's existing strengths in

the banking in dustry. Edgerton said of companies that

had approached Citibank to partner with i t: Citibank

brings consid erable value to potential alliance par tner s.

They're interested in ou r brand, o ur f inancial services

expertise , our global presence, our strong customer

relationships and position as a trusted provider , as

wel l as our knowledge of spec i f ic indust r ies and

international markets. 39

In 2004, Citiban k acquired Lava Trading , a leader

in e lec t ronic execut ion and se l l- s ide order manage-

m e n t sys t e m s . Th i s a c qu i s i t i on e na b le d C i t iba nk

to offer insti tutional clients the benefits of the most

sophis t ica ted and robust e lec t ronic t rading sys tem

in the marke t , wi th technology tha t complemented

a nd e nha nc e d the i r ex i st ing p l a t f o rm s a nd p r odu c t

ranges.

.

.

than U S$3 t r i l l ion in payments every day. On aver -

age, i t held U S$189 bill ion in l iabili ty balances u nd er

adminis t ra t ion and US$10.4 t r i l l ion in asse ts under

custody and t rus t , and had the wor ld 's la rges t com -

merc ia l le t te r -of -c redi t por t fol io , wor th over US$7

billion.

Connect in Citibank's

E-Business Strategy

Cu sto me r convenience was the thrust of the continuous

evolution of Citibank's products and services. Key to

this goal was providing clients with more channels to

access Citibank, and the Intern et provided.Citibank the

flexibili ty to meet this demand. Jorge ~ er rn uh ez , i t ibank

executive vice-president and head of e-Business, stated:

A core p art of our e-business strategy is Web-enabling

our curr ent services. With CitiDirect, we' are building

the infrastructure that will serve as the foundation for

man y of the value-added services we are developing on

the Internet. 40

CitiDirect was designed for corporate customers to

do full transactions on line anywhere aro un d the world.4'

I t was a browser-based delivery channel designed to

deliver all of Citibank's cash management and trade

produ c ts and services onl ine , enabl ing customers to

make inquir ies about their account balances, request

statem ents, provide transaction initia tion details, and

request statement transaction reports onlin e and in real

time. CitiDirect allowed customers to perform these

functio ns a t any location with Internet access. This was

particularly useful for global companies wit h operations

spread o ut in many countr ies but wishing to maintain

con trol a t regional or global treasury centers.

CitiDirect was piloted in October 2000. In Asia, it was

piloted in Singapore, H on g Kong, Australia, Japan, and

M a l a y ~ i a . 4 ~n 2000, CitiDirect was operating i n 36 coun-

tries a n d available in five languages and w as expected t o

be operatin g in 80 countr ies and 20 languages and doing

a trillion U.S. dollars of business per da y by 2002.43 n

May 2001, CitiDirect was already serving 1,000 corpo-

rate custo mers worldwide.

In 2003, Ci t ibank upgraded Ci t iDirec t Onl ine

Banking to offer complete payment, receivables, and

trade capabilities in e merg ing markets. T h e service was

ma de available in 90 countri es and in 20 languages, and

was awa rded Best of the W eb for 2003 by Forbes.com in

the fi nanci al services category. In 2004 alone , this corpo-

rate banking platform processed more than 39 million

transac t ions a round the wor ld . Ci t in i rec t l inked the

back-office systems of 90 countries and allowed Citibank

to replace its outdated a nd less-powerful systems and

move training and customer services online.

In 2006, Citibank developed TreasuryVision, which

was sim ilar to CitiDirect. As Paul Galant, hea d of Global

Cash M anagement for Citibank, noted, We are putting

a lot of energy behind it an d TreasuryVision essentially

meets t he trends in the marketplace. It conn ects our cli-

ents not only to their internal systems, but it also con-

nects t o their enterprise resource planning systems.


10/13

TreasuryVision was staffed by world-class employ-

ees with expert knowledge of financial data. Once the

data were proved by these experts, they would be put

into a know ledge warehouse and provided to clients (i.e.,

corporate treasuries). Therefore, TreasuryVision would

no t only be an effective way of managing liquidity, but

also be a useful channel for knowledge man agem ent.

~ransform n Citibank's

e-Business Strategy

Transact ion process ing, such as cash management ,

trade finance, and derivatives, was a back-office activ-

ity that was no t at the forefro nt of custom ers mind s.

Tradi t ional ly, t ransact ion process ing for a corporate

customer (e.g., the transactional work involved in loan

processing) was a function of the bank-customer rela-

tionship. Citibank s global presence translated to a huge

transact ional business and required support ing more

than 200 data centers, which did basic, repeatable pro-

cesses. In 1998, Citibank realized that, similar to any

other factory product, this could be commoditized. At

that point, Citibank began th e transformation.

Regionalization

The transformation process involved consolidating all

the data centers within each country a nd moving them

to Singapore. Data were centralized and systems were

developed to manage the automatic processing of trans-

actions. By Ma y 1999, the data cen ters wer e consolidated

down to 60. O n the operat ions s ide, Ci t ibankb egan with

the regionalization of cash and trade, which afforded

Citibank a complete focus on the process. Approaches

that C itibank used to decide the location for the region-

alized centers were not mutually exclusive. It had con-

sidered th e following in various combinations:

Take the biggest infrastructure already existing (i.e.,

Singapore) and b uild it up to replace all the smaller

centers.

Ask where to get the best balance of al l factors

of product ion and s tar t there from scratch (e.g. ,

Penang)-Greenfield Approach.

Rely o n locally available people and skills (e.g., Sydney).

Consider the pure cost of labor for lower-skilled

areas such as voucher processing.

As a way to lower costs and improve efficiency, in

~

2006, Citibank reduced the number of data centers by

20 percent. I n April 2007, in o rde r to save the com pan y

m o re th an U S 1 0 b i l l i o ~ ~ ,i t ibank int roduced a plan

2

to overhaul i ts IT operat ions . I t planned to further

consol idate i t s exis t ing data centers , bet ter use i t s

'

exis t ing technologies , opt imize i t s global voice and

E

data networks, standardize its application developm ent

processes, and consolidate its vendor networks.

Y

2

The regionalized and specialized processing centers

provided Ci t ibank scale and cont inual improvement

opportunities. They reduced th e cycle time for transac-

L?

tions, reduced e rro r rates to nearly z ero, and yielded ne w

efficiencies for Citibank and its customers. As one m an -

'

ager noted:

ij

We re now able t o fragment the process and focus on the

little pieces th at ma ke the dz ference, this also mea ns th at

there? a lot of exchange of information and standardiza-

2

tion of processes.

-VENRY

K R I S H N A K U M A R

ITIBANK ICE-

PRESIDENT

ND

REGIONAL

IRECTOR PERATION

AND TE CH NO LO GYSIA-PACIFICND JAPA '

Internalizing the Web

Within Ci t ibank, there was a program to promote th e

e-workplace. Th e processing cen ters in particular had

taken off throu gh integrating the W eb into their business

processes. The transformations in the processing cycle

focused on workflow automation; employees now had

access to information without the need to make phone

calls, check pap er files, or se nd faxes. Processing ce nter s

had previously required millions of checks and huge rec-

onci lement departments , which were paper-based and

labor-intensive. The central ized an d specialized pro -

cessing location s made it easier fo r Citibank to inte grate

secure databases into the processing of a transaction.

For example, signature-verification and digital-imaging

systems were linked with the fu nd s-tran sfer system.46

Straight-Through Automation

Citibank was continuously pus hing the limits of straight-

through autom ation by constan tly deploying various ini-

tiatives. For exa mple, Citibank co ndu cted som e artificial

intelligence projects, such as prepopulating forms with

historical data, which dramatically reduced error rates.

Singapore, which had back-office op erations in several It could select rejected transactions and take a look at a

of the bank s business u nits, was the first processing

customer s history with similar transaction s and try to

center tha t was regional ized, fo llowed by P e n a r ~ g ~ ~nd

predict what the customer wou ld tr y to doe4 Th e effec-

Sydney s foreign-exchange an d derivatives centers. The

tive implementation of such projects was attributable to

centers were time-zone-centric, so that d ecisions were

the qualified and experienced staff at Citibank.

based on the three cont inental t ime zones of Europe,

The benefits ofefficiency a nd cost savings also trickled

Asia, and the Americas.

down to Citibank s customers. I n tradition al transactions,


11/13

customers deposited checks into ATM s or open ed Letters

of Credit by subm itting the paperwo rk to banks, but the y

did not know w hen the banks would actually perform t he

task. With Citibank's straight-through processing, cus-

tomers' expectations and need to know were matched

because the processes took place online and in real time.

m

-0

Achievements

Proof that Citibank was at the top of its league was the

awa rds 'jt received (Exhibit

4 .

Citibank was the first

Y

company in the financial services industry to receive a

quality award for its cash-processing center or regional

5 cash-process manage ment unit (RCPMU). Custome r

surveys showed th at Citibank 's RCPMTJ was rated highe r

than those of its competitors in the areas of accuracy,

-

timeliness, accessibility, and responsiveness several years

in a row. Process ing was fast bec omin g one of Citibank's

unique selling propositions. Citibank's commitment to

excellence in its processing business translated to gre ater

transparenc y of the process for customers, allowing them

ful l access to information about the s tatus of their

transactions.

Extend in Citibank's E-Business

Strategy

CitiDirect's roll-out was evidence of Citibank's vision of

delivering transaction services online anywhere in the

world at any time. Building a new global infrastructure

gave Citibank the opportunity to deliver e-products at

scale more quickly and efficiently, and any capability

improvements in one region would be seamlessly

deployed worldwide. Citibank expected CitiDirect to

evolve constantly, which would give Citiban ktheflexibility

to cont inuously enhance the system according to the

changing needs of its customers. O ther E uropean banks

focused mainly on providing pan-European solutions;

very few banks wanted to deliver global services.

Citibank's priority was to move all its corpo rate

customers onto CitiDirect because its main goal was to

retire the legacy systems of electronic bank ing. Citib ank

had to contend, however, with difficulties in migrating

customers from using traditional means to using the

new products an d services. Citibank's corporate clients

included top-tier MNCs as well as SMEs. Previously,

Citibank had not focused o n SMEs; it was in 1997 that

it started to c onsider the SME segment and introdu ced

C i t i B u ~ i n e s s . ~ ~hile MNCs d ealing in e-business knew

what they wanted, SMEs that wanted an e-business

presence were u nsure how to move forward. Some were

no t even e-enab led and were still tied up with the legacy

systems of the 1970s, 1980s, and 1990s. The greatest

concern among most customers was securi ty. Some

resisted ma king the tra nsition because they were skeptical

about securi ty, and such behavior was entrenched.

CitiDirect had already developed sophisticated security

procedures using the latest encrypt ion techniques. ~ t s

mi~ltilayered ecurity a rchitecture included public and

private access keys, single-use passwords, an d m ultiple

authorization controls. Despite Citibank's readiness,

customer concerns ab out security did somewhat hinder

Citibank's roll-out of We b-ba sed applications.

In 2001, Citibank still provided services using legacy

systems for conservative SME customers, while at the

same time serving global customers such as MNCs that

deman ded to transact throug h the Internet. Citibank was

aware that building customers' trust in the Web took

years of education. To encourage conservative custom-

ers to embrace C itiDirect, Citibank's plan was to build a

strategy that included a pricing incentive scheme.

The Citibank Advantage

lobal

Reach

As part of a global financial institution that employed

over 268,000 employees in 100 countries, Citibank was

uniquely positioned t o serve its customers' global needs.

In em erging markets, w here 86 percent of the world's

population lived and which accounted for 4 percent of

the world's purchasing power, Citibank implemented

an embed ded bank strategy. Thro ugh this strategy,

Citib ank established r oots in a cou ntry as deep as those of

any local indigenous ban k by building a bro ad customer

base, offering diverse prod ucts, actively participating in

the c ommu nity, and rec ruiting staff and senior m anage-

ment f rom the local population. This local comm itment

and history, together with Citibank's global reach and

expertise, was a powerful com bination that set Citibank

apart from its competition. In 2002, Citibank celebrated

its 100th year of opera tions in Ch ina, Hong Kong, India,

Japan, the Philippines, an d Singapore.

Continuous Investment in Technology

Citibank was committed to upholding its position as a

premier supplier of cash-m anagem ent and transactional

banking services and invested heavily in technology to

improve its services. 'The main goal was to provide cor-

porate customers the most cost-effective, cutting-edge,

rel iable, and secure solut ions. As a Ci t ibank senior

executive explained, W e continuously invest in tech-

nology an d it's one of o u r competitive advantages. We've

been ar ou nd a long time , we have been able to invest year

after year, and we have seen compounded value from

that. A new entr ant wou ld have a difficult time investing

all at once , but by sp endin g money o n infrastructure-

not o n salespeople or front ends-I think that's how you

stay in the position we're in. '


12/13

Technology was used as a me ans to achieve a strategic

objective for Citibank. With the need to lower costs and

improve efficiency, its investment in IT provided better cli-

ent services at a lower cost. Chuck Prince, former chiefexec-

utive of Citigroup , said, One of our goals is to have mo re

com mo n systems an d standar ds across Citigroup so clients

can transac t with us mo re easily, no m atter what business is

serving them or where they're conducting bu~ ines s. ~'

onclusion

The In ternet affected m any areas of banking an d changed

how institution s make strategic decisions. At the same time,

technology changed customers' expectations and needs.

It was a challenge for Citibank to translate its traditional

strengths to the Intern et in a way that would add value for

its customers. C itibank resp onded to this challenge by:

Deploying Web-enabl ing access points to al low

customers to connect seamlessly to Citibank.

?.

Building a new global infrastructure to deliver produ cts

and services online.

Integrating products in new ways.

In a business environment where change was

inev i tab le and compet i t ion was tough , Ci t ibank

needed a distinctive strategic direction that would

create:c ompe titive advantages that would not be easily

replicated by its competitors. Citibank also needed

to

make transformations on a global scale to deliver its

e-business strategy and create a business culture that

would embrace the e-banking concept, a key element

of a highly integrated e-business, within a reasonable

budget.

A key question for Citibank is how can it continue

to be successful and stay ahead of the competition as

Web-enabled technology diffuses through the banlung

industry? Also, what future trends will emerge that

Citibank will need to address in order to continue to be

in the lead?

1. D. Baron

&

D. Besanko, 2001. Strategy, organization and

incentives: Global corporate banking at Citibank, lndustrial and

Corporate Change, lO(1): 12-14.

2. Ibid.

3.

Citigroup 2006 Annual Report.

4.

D. Baron & D. Besanko, 2001, Strategy, organization and

incentives: Global corporate banking at Citibank, lndustrial and

Corporate Change, lO(1): 12-1

4.

5. This section adapted from Citigroup. 2008, Global Transaction

Services: Cash M anagem ent, http://www.transactionservices

citigroup comltransactionservices/homepage/cash/cash~mgmt htm

(accessed February 18, 2008).

6

Introd uced in the 19 70s as an alternative to traditional check

payme nts, ACH is a secure networ k connecting banks to each

other. Direct deposits, electronic paym ents, money transfers,

debit- card payments, business-to-business payments, and even tax

transactions may be processed through the ACH network.

7. This section adapted from Citigroup. 2008, Global Transaction

Services: Securities and Fund Services, ht tpJ /w. t ransac t ionserv ices

citigroup.com/transactionse~ices/homepage/securitiesfunds.htm

(accessed February 18, 200 8).

8. This section adapted from Citigroup, 2008. Global Transaction

Services: Trade Services and Finance, http://www

.transactionservices.citigroup.com/transactionservices/homepage/

trade/index.htm (accessed February 18, 2008).

9

Company interview in July 2001.

10. Citigr oup 2006 Annual Report.

11. Deloitte, 2007, Global banking industry outlook: Issues on the

horizon 2007,

http://www deloitte comlcda/content/banking pdf

(accessed February 20, 2008).

12. Ibid.

13.

J.

Vijayan, 2007. Citig roup to lay off 17,000. overha ul IT operations,

ComputerWorld, April 11.

14. A credit crunch is a state in which there is a short supply of cash

to len d to businesses and consum ers and interest rates are high.

Princeton University, 2008, Credit crunch,

http://wordnet.princeton

.edu/perl/webw n (accessed February 20. 2008).

15. C. Cockerill, 2001, Cash management takes to the Internet.

Eurornoney, 381 Jan uary): 105.

Greenwich Associates was an international research and co nsulting

firm sp ecializing in financial services. Greenw ich Associates

interviewed 500 corporate treasurers and other executives at

middle-m arket companies in the U nited States and Canada in

May-June 2001. See also:

D.

Rountree, 2001, Impor tance of on-line

banking, Bank Technology News, 14(11):86.

For example, if a company shipped a buyer 10 0 products at

US410 per piece, bu t five of the produc ts were defective , the

company might simply remit US$50 electronically without any

information ab out the defective products. In such a case, there

would b e greater possibility of costly payment processes because

of back-and-forth inquiries. The solution would be to send a paper

explanation; however, this could translate to additioiial billing

inquiries and disputes.

To use the ACH network, a company was required to have between

US10 million and USS50 million in annual revenues.

J.

Jensen, 2007, Bank-to-corp orate conn ediv ity: The next stage.

http:l lwww.gtnews.com/article/6878.cfm,

August 16 (accessed

February 13, 2008).

SWlFTNet is a general-purpose, industry-standard solution for the

financial industry. It provides an application-independent, single

window interface to all the financial institutions around the globe.

EDIFACT is the international ED1 standard developed by the United

Nations.

IS0 is a worldwide federation of National Standards Bodies.

IS020022 (U Nlversal F inancial Industry [UNIF I] message scheme)

provides the financial industry with a common platform for the

developm ent o f messages in a standardize d XML syntax.

Ibid.

Ibid.

The Sarbanes-Oxley Act of 2002 is a U.S. federal law enacted in

response to a number of major corporate and accounting scandals,

which establishes new or enha nced standards for all U.S. public

company boards, management, and public accounting firms.

P. Clark, 2001, No longer banking on exchanges. to

6

86(13):

13.

S. DeZoysa, 2007, A strategy for future grow th: Banking challenges

and trends, http://www gtnews com/feature/201 .cfm, August 16

(accessed February 12. 2008).


13/13

..... .

28.

The Basel Accords a re issued by the Basel Comm ittee on Banking

m

.

Supervision o m ake recommendations on banking laws and

c

regulations. Basel II is the second of the Basel Accords, discussing

m

m

how much capital banks need to put aside to prepare for the types

r

of financial and oper ational risks they face.

o

29.

A.

Papanikolaou, 2007, Impact of Basel II on bank's IT strategies,

g http://www.gtnews.com/article/6875.cfm.

August

16

(accessed

U February 13, 2008).

30.

Company interview in July 2001.

31.

2001, CitiDirect online banking-a new era in business banking,

'2

Asiamoney, May, 84.

32.

J. Vijayan, 2007, Cit igro up to lay off 17,000, overha ul IT

r

-

operati6ns. Cornpu teworld , April 11.

33.

~ o b e r t illurnstad was head of e-Consumer while Edward Horowitz

V was head of e-Citi.

34.

Bermudez report ed to V ictor Menezes, chairman and chief

.

V

executive of Citibank, and to the IOG.

35

Reed resigned from his co-CEO post on A pril 18, 2000.

36. For example. Wells Fargo

&

Co. and Chase Manh attan Corp.

m

integrated their effo rts on using the Inter net more closely with their

+ business units.

37. Citibank. 2000, Citibank seeks alliances to accelerate into the

r

e-space, The Citibank Globe, http://www.citibank.com:e-business/,

V November-D ecember (accessed December 3,2001).

38. Citibank partner companies were Enron Broadband Services

(a delivery platior m), i2 Technologies (an integrated open-

architecture solution). S1 Corporation (a provider o f Internet-based

payment processing), and Wells Fargo Company (a provider of

complementary services to the entire e-business market).

39. Citibank. 2000, Citibenk seeks alliances t o accelerate into the

e-space, The Citibank Globe, http://www.citibank.com/e-business/,

November-D ecember (accessed Dece mber 3. 2001).

Ibid.

During t he development o f CitiDirect, C itibank asked its customers

what they wanted from e-com merce and the Internet. Customers

put a premium on security, stability, speed, accuracy, and user-

friendliness.

2001, CitiDirect online banking-a new era in business bankin g,

Asiarnoney, May, 83.

C. Power, 2000, Citibank deploys its Web troops into business

lines, American Banker, 165(230), 1.

In Singapore, front-end securities processing was also regionalized;

however, due to local settleme nt issues, the back-end processing

o

securities transactions still needed to be done in individual

countries.

2001, Processing comes to the fore, Finance Asia, May, 83.

A system similar to SWIFT and Forex systems.

2001, Processing comes to th e fore, Finance Asia, May, 83.

The center processed up to U S$20 billion worth of transactions

daily.

CitiBusiness was a one-s top financ ing solution offered to SME

entrepreneurs. Products and services ncluded: CitiBusiness Direct

(Interne t banking); Cash Man agem ent; Trade Sewices and Trade

Finance (trade products); CitiCorp Commercial Finance (asset-

based finance); treasury prod ucts such as Spot and Forw ard

Foreig n Exchange, Interest Rate Hedging, and Yield Enhancement

Investment Products; and a customer center. The customer center

provided CitiService (an integ rate d customer inquiry line for after-

sales services), Document Collec tion (an express collection service),

CitiFax (a convenient way to upd ate account information) and

CitiBusiness Direct (providing online access to account information

and transac tion initiation).

Finance Asia, 2001, Processing comes to the fore, May, 83.

Citigroup 2005 Annual Report.

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Case 17 Citibank's E-Business Strategy for Global Corporate Banking

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