Citibank’s e-Business Strategy for Global Corporate Banking Citibank’s Global Cash and Trade division was in the business of managing the flow of money for its corporate customers. It provided the tools and channels for its customers to receive money efficiently and to make payment in a timely fashion. In 2000, intense competition and the dot com boom put pressure on Citibank and its competitors to transform their business in the new economy. In response to these challenges, Citibank made a serious push to deliver integrated solutions that would enable its corporate customers to conduct transactions on-line. Citibank’s e-business strategy – Connect, Transform and Extend – was to Web-enable its core services, develop integrated solutions, and reach new markets. The ultimate goal was to build a single Web-enabled platform for all customers with similar needs. To transform its Global Cash and Trade Division into an e-business, Citibank faced challenges in serving its corporate customers who had discrepant needs. Sophisticated clients, such as multinational companies (MNCs), required custom-built host-to-host product interface. Other customers, such as the small-and-medium-sized enterprises (SMEs), were more conservative and were not ready for web-based solutions. How could Citibank build a flexible and agile e-business product that could capture their total cash management & trade service needs? Given Citibank’s enormous global reach, how could it integrate the Internet initiatives into its overall strategy and create sustainable competitive advantages?
Global Corporate Banking at Citibank1
Citibank was incorporated in 1812 under the name of City Bank of New York. The bank had experienced several mergers since inception. The name Citibank N.A. was adopted in 1976. Following the merger with Travellers Group in 1998, the holding company changed its name to Citigroup Inc. In 2001, the Group employed 268,000 staff across over 100 countries serving 192 million customers.
Baron, D. and Besanko, D. (2001), “Strategy, Organization and Incentives: Global Corporate Banking at Citibank,” Industrial and Corporate Change, 10(1), pp. 12-14.
Marissa McCauley prepared this case in conjunction with Shamza Khan under the supervision of Prof. Julie H. Yu and Dr. Ali Farhoomand for class discussion. This case is not intended to show effective or ineffective handling of decision or business processes. This case is part of a project funded by a teaching development grant from the University Grants Committee (UGC) of Hong Kong. © 2002 by The Centre for Asian Business Cases, 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. 01/130C 7 June, 2002
Citibank’s e-Business Strategy for Global Corporate Banking
Since the 1990s, Citibank’s corporate banking activities evolved from a highly decentralised set of operation to a more centralised one, with much attention focused on 1,400 large global corporations and institutional investors. By 1997, Citibank was one of the most profitable banks in the US. Its profits in 1997 were US$3.59 billion, with global corporate banking accounting for US$2.56 billion. By most measures, Citibank was the most global US bank. For corporate customers, Citibank traditionally provided a full range of financial services, except for investment banking services in the US. The core products were broadly grouped into three categories: 1. Transaction services – such as cash management, trade and custody services 2. Corporate finance services – such as working capital finance, trade finance and asset-based financing 3. Treasury market services – such as hedging and foreign exchange Citibank’s Cash Management and Trade Services (2000) Citibank had a defined strategy...