Essay About Citibanks E-Business Strategy And Professor Julie H. Yu

Technology in Banks
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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
ALI FARHOOMAND
CITIBANKS 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. Citibanks 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 Citibanks 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
Purchased by Sami Alsenidy ([email protected]) on February 02, 2013
08/402C Citibanks e-Business Strategy for Global Corporate Banking (2008)
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, Citibanks 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. Citibanks global corporate banking
business continued its healthy growth. The banks Cash and Trade service was a core product
offered to corporate customers. By 2000, Citibanks 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