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 rather than the “end goal.” 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. These technologies include ATM’s, telephone lines, and the paperless system of payments which is a secure business transaction for the customer.
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 while still increasing the “bottom line” and its profitability. Mobile and Web are very important to the new market and image that Citibank is trying to create by going establishing themselves on the internet, 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.
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). This e-business also allows for more flexibility and ensures that Citibank will remain ahead of the competition by investing in infrastructure that would only make the experience more convenient for the customer. The transformation was successful due to the centralization around the consumer and increased focus on the customers. By doing so, it was necessary to ensure that Citibank was investing in the right technology to improve the efficiency and customer satisfaction. For example, 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 to ensure a successful implementation. One of these issues include the consistency of data and the learning curve/impact for the customer 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. 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.
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 not sharing their clients’ information with the vendors and suppliers. This is very important because they are protecting the privacy for the customers. Citibank was able to do so 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.
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 e-business structure based through the internet. Citibank is still global and meeting the needs of its customers, and still improving bottom line by doing so. 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. 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. 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 subside, their plan will continue to run smoothly as when it was originally implemented.