Citi Bank Is Winning at Digital
Brought to you by WBR Insights
There are many different attitudes towards digital transformation. Many see it as a destroyer which is laying waste to old ways of doing things. Others see it as an evolution that simply represents the natural course of progress. And then there are those who see it as disruptive yet complementary to current business practices.
When it comes to the banking industry, one may look at the current spate of branch closures and see digital transformation as one which is destroying the physical bank network. However, there are many brands that are utilizing digital technology to transform their business. Some, like JP Morgan Chase are adopting an omnichannel strategy, investing in both digital and physical, while others are going focusing entirely on digital.
The bank's Asian franchise was recently granted the award for Best Digital Bank in Euromoney's 2019 Awards for Excellence program - considered one of the most prestigious award programs in the global financial services industry.
Lauded for its digital transformation in both its consumer and business facing arms, Citibank was noted as having improved operating efficiency by a significant margin between 2018 and 2019. This was compounded by a seven percent growth in consumer revenues, from $7.2 billion to $7.8 billion, which was underpinned by a 50 percent increase in digital revenues from the region.
"We are honored to receive this recognition," said Asia Pacific and EMEA Head of Consumer Banking, Gonzalo Luchetti. "The Consumer Banking business in Asia continues to transform with a light physical and high digital strategy and we remain committed to giving our clients the best experience. Using digital, we are empowering our clients to bank through the channels they prefer and in a manner that is simpler, more convenient and easily accessible."
Citibank has around 7.5 million digitally-active customers across Asia and over 5.4 million mobile active customers, representing a significant digital footprint for the brand. This popularity has been accredited to Citibank's use of innovative partnerships with brands such as Grab, Apple, Spotify, and Paytm, which allows the brand to integrate itself with every aspect of its customers' lives.
On the business side of things, Citibank has made a significant investment into a brand-new mobile banking platform which will help the brand's professional clients better interact with it through 100 percent digital pricing and trading functionality.
"The introduction of a mobile app version of CitiDirect BE - Citibank's banking platform for institutional clients - coupled with biometric authentication and a new electronic banking FX pricing and trading engine that is underway with the Monetary Authority of Singapore were some digital highlights Euromoney singled out from the Institutional Clients Group," said Citibank in a press release.
Following the digital progress made in its Asian operations, Citibank in the US is now following suit. The bank is now convinced that a significant proportion of its customers are ready to forgo the physical branch entirely and go all in on digital financial services.
In the first quarter of 2019, Citigroup added roughly one billion dollars in digital deposits, more than all last year. About two-thirds of that total came from new customers, and a little more than half came from people who don't live near any of the bank's roughly 700 branches.
As one of the world's largest credit card providers, it should perhaps come as no surprise that this sector is one in which Citibank is innovating. It has developed and launched a new account through its mobile app for its credit card customers and offering mobile banking specific rewards tied to the use of those cards.
Citibank's decision to go all in on digital is a bold one. Much research still says that, while customers prefer to use online and mobile banking to perform simple transactions such as checking their balance or making payments, they still like to talk to a financial professional face-to-face when it comes to more significant financial matters such as opening new accounts or arranging loans and mortgages.
"Other big banks are ramping up their digital offerings too, but they are doing it alongside their giant branch networks," reports The Wall Street Journal. "Citigroup is wagering that many of those locations - more than 4,000 each for JPMorgan and Bank of America - will become burdensome. Banks have had some success attracting savers with high-yield online accounts but still find it difficult to establish traditional banking relationships with customers who don't have access to branches."
With a digitally-focused approach, Citibank is making a bold statement. However, with the brand's digital offerings doing so well in Asia, it would seem to have a good chance of repeating that success here in the US.
The battle between physical and digital banking is set to be a hot topic at Future Digital Finance 2020, taking place in March at the Hyatt Regency Miami, FL.
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