Citibank's E-Business Strategy for Global Corporate Banking

Case Analysis - Citibank's e-Business Strategy for Global Corporate Banking

Citibank’s e-Business Model

Initially, Citibank’s e-business model was more of ‘Direct to Customer’ for offering its retail banking services that later turned into a ‘Full Service Provider’ model when it introduced its corporate banking services. This implied that Citibank customers could directly use its services and the three elements of the business model i.e. value stream, revenue stream and logistics stream complemented each other, thereby aligning the model with Citigroup’s strategy. Per study conducted by Booz, Allen and Hamilton, the cost per transaction for banks by channel is shown below (in order of decreasing cost), which clearly shows that the internet channel has the lowest cost per transaction, which again fits into Citibank’s e-business strategy to reduce operational costs:

• Branch: U.S $3.00

• Telephone: $1.50,

• ATM: $0.78 - $0.42,

• IVR: $0.30,

• Point of sale: $0.42 - $0.24, and

• Internet: $0.12 - $0.06

Also, as shown by the statistics below, the banking industry had gained momentum for doing business using internet and based on the costs and level of services it could provide to customers, this was in sync with Citibank’s’ strategic goals. In order for Citibank to transform its traditional assets into digital assets, it first established the departments necessary to manage this process. In March 2000, Citibank formed the Internet Operation Group which was in charge of distributing Internet activities among all other business units. In April 2000, Citibank formed the e-Consumer and e-Business segments, designed to infuse the Internet into all customer and corporate banking activities. Following that in May 2000, Citibank added e-Capital Markets and e-Assets Management.[pic]

Internet’s Impact on Corporate Banking

Porter’s five forces model is the framework for analyzing determinants of any industry’s profitability....