Technology in Banks

Dr Minyi Huang prepared this updated version of the case with the same title published in 2001 under the supervision of

Professor Julie H. Yu and Professor Ali Farhoomand for class discussion. This case is not intended to show effective or

ineffective handling of decision or business processes.

© 2008 by The Asia Case Research Centre, The University of Hong Kong. No part of this publication may be reproduced or

transmitted in any form or by any means--electronic, mechanical, photocopying, recording, or otherwise (including the

internet)--without the permission of The University of Hong Kong.

Ref. 08/402C

1

ALI FARHOOMAND

CITIBANK'S E-BUSINESS STRATEGY FOR

GLOBAL CORPORATE BANKING (2008)

In 2000, in response to intense competition and the dotcom boom, Citibank made a serious

push to deliver integrated solutions that enabled its corporate customers to conduct business

online. Citibank's e-business strategy ("connect, transform and extend") was to web-enable

its core services, develop integrated solutions and reach new markets. Citibank aimed to build

a single web-enabled platform for all customers with similar needs. Following the success of

CitiDirect, a corporate banking platform which was developed in 2000 and strengthened in

2003, Citibank started to develop TreasuryVision as a replacement to suit the changing

marketplace.

When developing its e-business, Citibank faced constant challenges in serving corporate

customers with diverse needs. Sophisticated clients, such as multinational companies

("MNCs"), required custom-built host-to-host product interfaces. Other customers, such as

small- and medium-sized enterprises ("SMEs"), were more conservative and were not ready

for web-based solutions. Meanwhile, Citibank was under increasing pressure to cut costs and

improve efficiency. Especially following the outcry over subprime mortgages in October

2007, Citibank had to face a very tough business environment.

How could Citibank build a flexible and agile e-business product that could capture its

clients' total cash-management and trade-service needs? Meanwhile, how could Citibank use

its e-business strategy to lower costs and improve efficiency? Given Citibank's enormous

global reach, how could it integrate internet initiatives into its overall strategy and create

sustainable competitive advantages?

Global Corporate Banking at Citibank

Citibank 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

merger with Travellers Group in 1998, the holding company changed its name to Citigroup

HKU797

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08/402C Citibank's e-Business Strategy for Global Corporate Banking (2008)

2

Inc ("Citigroup"). In 2006, Citigroup employed 325,000 staff serving 200 million customers

in over 100 countries and had an information technology ("IT") expenditure of US$3,762

million.

Starting in the 1990s, Citibank's corporate banking activities evolved from a highly

decentralised set of operations to becoming more centralised, with much attention focused on

1,400 large global corporations and institutional investors. 1 Starting in the mid-1990s,

Citibank transformed from a geography-based organisation into a multi-dimensional one with

the geography factor significantly de-emphasised. Customer needs became its first priority,

while product types were given second priority.2

By most measures, Citibank was the most global US bank. In 1997, Citibank became one of

the most profitable banks in the US, with the annual profit of US$3.59 billion, of which

global corporate banking accounted for US$2.56 billion. Citibank's global corporate 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 Trade division had already

exceeded US$1 trillion in financial transactions for customers and counterparts around the

world daily. These included foreign exchange transactions, equities, deposits, settlement of

trade transactions and payment of insurance policies. In 2006, the income from its global

corporate and investment banking activities reached US$7.127 billion, a 3% increase from

US$6.895 billion in 2005.3

Citibank developed a strategy for its corporate banking operations, and its target corporate

client base included MNCs, financial institutions, government sectors, local corporations and

SMEs. Citibank differentiated itself from other banks through customer service by offering

telephone hotlines, relationship managers who understood clients' needs