MIS 760 – IT Strategy
Case Study: Citibank’s E-Business Strategy for Global Corporate Banking
1. What are the impacts of the internet on the competitive landscape of corporate banking? (Hint: use Porters 5 forces)
Using Porter’s 5 Forces, we begin with the threat of new entrants. As a new entrant, Citibank entered the internet-based corporate world in 2007 with their web-enabled payment using WorldLink Payment Services. This allowed both companies using Citibank and clients with money in Citibank to pay their clients and move their money respectively. Using advanced IT, safety and security of these transactions are ensured. Citibank also entered the world of internet investment transactions where people have the option to make investments through their online portal: “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, web-based electronic banking platform, CitiDirect Online Banking which was later replaced by TreasuryVision.” City bank used various “suppliers,” which were just companies with established web-enabled financial services that Citibank could use, including WorldLink Payment Services and TreasuryVision. However, with their online services being introduced, there came the threat of substitutes. Big businesses realized that as they grew, they could simply use the internet to sell directly to their consumers. Citibank then needed a way to show these businesses that going through Citibank was much more worth their while than going through the internet themselves, which drove up the competition and need for more from the internet banking capabilities. This also put more power in the hands of the companies they were serving, which actually put more power into the hands of the buyer. Overall, the internet provided Citibank with more channels to meet their clients, and giving them a competitive advantage over industry rivals.
2. What has Citibank done to differentiate its e-business products from those of its
Citibank was able to differentiate its e-business products from those of its competitors by focusing on customer service through IT. Customer service and the customer satisfaction that is provided was the main focus, and it was evident on Citibank’s focus on the support, IT and quick response to the its clients, making sure the they felt confidence in the brand they were trying to create. The customer service along with the products and services they provide are the reasons why Citibank is able to keep its recognition and loyalty throughout the world. Citibank utilizes many technologies to expand their client base and keep them satisfied, including their online banking functions, investing options, etc. As mentioned above, all of these functions come with easy guidelines on their use along with support from Citibank professionals if an issue in using the Citibank technologies arises. It all ties back to the customer service/support Citibank prides itself on.
3. What can Citibank do to create competitive advantages?
In order for Citibank to create competitive advantage they need to find a way to lower prices on products its profitability. In addition, it needs to maintain the stellar customer service reputation that they have established for themselves. Mobile and internet options are very important to the new market and image that Citibank is trying to create by establishing themselves on the web, so having the ability to initiate transitions on the internet and on mobile devices will set them apart and put them ahead of the competition. In addition, Citibank must also continue to provide fast and accurate support for their consumers should issues arise on with the new features through the internet and web so they can retain their client base that they have established.
4. How has Citibank successfully converted its traditional money management business into an e-business? During the process of transforming traditional assets to digital assets, what issues should a company like Citibank take into account to ensure successful
Citibank successfully established themselves as an internet e-business by converting its traditional money management into the aforementioned e-business system and therefore giving convenience to its customers (i.e. online investments). All the aspects that are offered in a brick and mortar style bank are now offered online using this e-business style, and customers have the convenience of depositing checks, moving money from checking to savings, and many other banking functions from the comfort of their home computer or mobile device. This e-business also allows for more flexibility in hours of operation. The online hours of Citibank are 24/7, and people can view balances and move money at any time of the day or night. The transition to the e-business style of banking was successful due to the centralization and focus around the consumer and increased focus on the customer service side of things. By creating this focus, it was necessary to ensure that Citibank was investing in the right technology to allow for the improvement of the efficiency of the bank and customer satisfaction. Use of systems to manage the automatic processing of transactions reduced human error and also made it easier for consumers to leave out the middle man when making transactions. In addition, the online and real time processing with the direct access to the information for customers and employees provides each with confidence in the system.
5. What actions has Citibank taken to serve the needs of two very different market segments, MNCs and SMEs?
During the process of transforming traditional assets to digital assets, Citibank should take into account various issues that may arise serving two very different market segments and to ensure a successful implementation. One of these issues include the consistency of data and the learning curve/impact for each market segment with the new system. Citibank successfully responded to these changes with new alliances with technological companies such as Oracle, SAP, and Commerce One, building a new global infrastructure and integrating products in new ways. This took care of MNC aspect of the market segment. From the other side of things, the SMEs are served in similar ways through, again, the reputable customer service that is provided by Citibank. Although the companies are smaller, they still have good service from the bank and feel like they are a real focus for Citibank and will help them with all their issues. Overall, Citibank developed two different strategies for each market segments: some local and some global, which can offer fast and worldwide capabilities. Citibank also provides fraud and identity theft protection, showing the advantages of online real time banking for the SMEs. Citibank also offers rewards such as free internet access as the customers slowly progress into a fully online environment, as the clients were not aware of the additional benefits of the internet.
6. How has Citibank’s Cash and Trade Group managed to develop different e-business
products for varied industries? With the market changing so rapidly, how does Citibank
identify market needs?
With a market that changes so rapidly, Citibank has managed to develop different e-business products for very diverse industries by utilizing the growing technology market and providing the convenience for their customers. The many products and services offered has been very successful for each market segment by meeting the needs of each groups. Also, the customer service lines are always open and ready to help customers, and relationships with managers and product specialists for the varied clients are required to identify the market needs and develop the new services according to the different industry segments. Identifying market needs is another aspect, which Citibank also does well. By doing market research and determining a need that the customers in this market have will determine another product or service Citibank can offer that will be of use to them.
7. One of Citibank’s challenges is in managing vendors and suppliers without allowing them to exploit its clients. How does Citibank protect its clients from its strategic partners?
Citibank manages vendors and suppliers without allowing them to exploit its clients. They do so by keeping their clients’ information with the vendors and suppliers. This ensures that a client/customers privacy will be protected, establishing privacy as a top concern for Citibank. Citibank was able to provide protection for their customers by using supplier technology without directly involving them, isolating them from working directly with their clients. In addition, using the different suppliers’ applications provide the best customer service to their clients without charging extra service fee. The goal is to give convenience to the customers using the Citibank applications and providing customers full access to their accounts whenever or wherever without difficulties or a breech in privacy.
8. Prepare a SWOT analysis to evaluate Citibank’s e-business strategy.
9. How does this case demonstrate the alignment of an e-business strategy with a company’s overall business strategy?
This case demonstrates the alignment of an e-business strategy with a company’s overall business strategy by emphasizing Citibank’s changes from traditional bank to a more internet-based, e-business structure, centralized around the promise of customer service and the opportunity for customers to perform all functions of a bank online. Citibank is still global and meeting the needs of its customers worldwide but even so are still improving in the ways that they can. The ability to offer a variety of products and services aligns perfectly with Citibank’s business strategy because it had to meet the needs of various different groups of customers: large corporations, small businesses, and individual consumers alike. The e-business strategy allowed Citibank to successfully provide full attention to all groups of consumers with relative ease because the issues that consumers were having are all centralized and easy to deal with.
10. Beyond the case: Citibank has hit hard times in the last several years. Do you think the strategy described in this case helped in the decline or was this a bright spot? Explain your answer.
I think the strategy implemented was a move that was necessary for the changing times. It helped to gain more clients at different levels on a global perspective due to its ease of reaching other countries through the use of the internet. In addition, it caters to all groups of people and companies due to the ease of use of the online banking and well-informed workers on the customer service line. The internet revolutionized the banking industry by giving the customers all the information and tools they need at the tips of their fingers to pose and answer questions about any and all issues they may be having with the bank. It also changed the customers and clients’ views and expectations for integration of its products and services in new ways. The issues Citibank faced in recent years had nothing to do with this new e-business strategy, but more due to the economic downturn/landscape of the time. Once the economic aspect of Citibank’s issues subsides, their plan will continue to run smoothly as when it was originally implemented. Therefore, the strategy implemented by Citibank was a bright side for the company.