E-Business Strategy of CitiBank - Term Paper Example

?E-Business Strategy Review Report on Internet Banking CitiBank Management Summary The development of businesses online is becoming a driving forcein most industries. For the banking system, this has become one of the essential components, specifically because it provides an alternative for customers to connect to those that are in the industry. Creating a strategy that can be used online is one which is important first in the capacities for customers to remain loyal to the bank. This is furthered with the concept of using e-business to gather new customers’ interest and to market and advertise the business. The development of an e-business strategy for CitiBank is one of the areas of development which can provide more available options to those interested in the business. Introduction The development of Citibank is one which is providing for new opportunities and services to be available, all which will provide a stronger relationship to customers through the use of e-business. Citi Bank began in 1987 with a focus on providing banking solutions to customers through various financial segments. The company is organized into two main segments, one which is based on Citi Corp and the other on Citi Holdings. The Citicorp consists of the products and services with regional consumer banking first. This includes retail banking, citi – branded credit cards and Latin American asset management. There is also a segment for institutional clients, which offers services of securities and banking and transaction services. In this sector, an institution can take part in investment banking, debt and equity markets, lending, private equity, hedge funds, real estate, structure products, private banking and equity and fixed income research. The transaction services consist of cash management, trade services, custody and fund services, clearing services and agency / trust services. The Citi Holdings also carries two segments. The first is inclusive of brokerage and asset management and the second is based on local consumer lending as well as a special asset pool. The brands are divided by the services which individuals and institutions require, ranging from mortgages to microfinance opportunities. There are over 200 million accounts held at Citi with 160 countries and jurisdictions that are served by the corporation (Citi Bank, 2011). The different products and services which are offered by Citi Bank are further defined by the governance guidelines which work as a foundation for the bank services and products. The governance is held by a board of directors which creates a relationship to the stakeholders, communities and managerial staff of Citi bank. The Board Members are elected by a confidential vote and are inclusive of 13-19 members that are responsible for the direction of the company. The driving force of the company is to create the ability for those who work with the bank to have access to responsible financing. This is based on the internal environment working with those in need, specifically so there is a return in responsibility for the financing. This also creates a response to value those who are using the financial services, specifically by creating relationships for specific needs and to provide services that offer alternatives for banking. The concept is followed by social responsibility, including giving to foundations, microfinancing and services that are used for asset building by individuals (Citi Bank, 2011). The approach which Citi Bank has toward financial services is one which has led it into being one of the top recognized banks globally. The first quarter earnings for 2011 led to a total of $3.0 billion, compared to $1.3 billion in the last quarter earnings of 2010. The earnings per share went up from $0.10 from $0.04 and the book value per share has risen by 15% from the prior year. The first quarter revenue of $19.7 billion was a profit from the last quarter by 7%. The credit losses also declined at an average of 25% from the first quarter of 2010. However, the assets have decreased, showing the holdings lowering to $337 billion, a 33% decline from the first quarter of 2010. This shows that, while there is a profitable year in the first quarter, compared to the last quarter, there was also a decline in the holdings sector of the bank, specifically which declined from 2010 (Citi Bank, 2011). Situation Analysis The analysis of Citi Bank is one which has been defined through several different aspects of the company. The SWOT analysis shows that Citi Bank is one of the leading forces in the industry and is able to use e-business as a main component to the ideologies that are a part of the company. The situation which Citi Bank is in can provide them with several different capabilities for growth while allowing them to use e-business as a compliment to the main strategies that are being looked into for the business. Redefining this and looking at the various elements of Citi Bank can then lead to more alternatives for the growth of the company. The strength of Citi Bank is one which has both internal and external ideologies working in the favor of the company. The division into two companies offers several options for growth and provides Citi Bank with several components toward growth. This is combined with the ideologies which are associated with the growth, specifically which is related to the diversity of products that are available. The products and services range from investor relations to options with banking, credit cards, lendings, investments and business alternatives. This allows Citi Bank to provide services to several niche markets while finding customized solutions for those that use the banking as their primary source. More important, it allows loyal customers to continue to expand with their needs into the company while looking at different options for investments. For today’s economy, this provides Citi Bank with several areas of growth and development that provide more alternatives for the internal and external environment. While Citi Bank has several strengths in the diversity of products and services, there are often gaps in understanding the primary focuses of the business and what can be done with the one company. For customers that are banking, for instance, may not be an association with using the credit card services that are also offered or the mortgage services which are provided. The other components of the services are not clearly defined unless one is already using the service for one specific niche. The same weakness is noted with the business banking that is available, both with lending and with investments which can be made. While Citi Bank is able to offer comprehensive packages, these are usually associated with what a customer already defines what is needed, as opposed to what can be looked into with the current money market. The gap in information, both with the services, as well as with other ways to invest in banking, then leaves different alternatives for the banking. This can be noted because of the division between Citi Corp and Citi Holdings. The Corp has increased from the last quarter earnings with a 7% profit. However, the holdings have decreased by almost 33%. This shows that there isn’t a cross relationship between the two branches and the several products which are offered. The opportunities with Citi Bank rely on the diversity of the products as well as the locations that are available. Currently, the bank is located in over 160 countries. It has developed enough since the opening to offer diverse services and to grow in recognition. This has led to a substantial amount of profit to be made within the company and has offered continuous growth, specifically which is seen with the financial relationships between the first quarter earnings and the last year earnings. The area which is already growing can be supported even more to ensure that the business is able to diversify in recognition while continuing to offer more to the community. The opportunities are not only inclusive of the recognition but also to the social commitment that Citi Bank is currently working with. This provides opportunities for different types of advertising as well as more services which can be offered and segmented to diverse groups in various regions of the world. The threats that are linked to Citi Bank are furthered as well, specifically because of the amount of competition which is associated with banking. There are several other banks which have gained the same recognition on a global basis and which offer similar products. The larger banks are often focused on squeezing out the smaller banks to get rid of the competition and to take the clients who need diverse products and services. This has created several banking systems that have driven to the top and which are competing at a global level. Places such as Chase, Westbank and HSBC are all fighting for the top options in banking at a global level, all which is associated with lending money with diverse options in the current conditions that are a part of the economy. The bank competition is combined with the trends in the economy as well as in the social changes which are now associated with the concept of banking because of changes in finances that have recently been established (AAP, 2011). The strengths and weaknesses that are associated with Citi Bank are combined with the concept of Porter’s five forces model, as initialized by the graph below. Graph 1: Porter’s Five Force Model The associations that are made with Citi Bank follow this model through several trends which are occurring in the market at this time. Threat of New Entrants: The changes that are occurring within the banking system have led to a continuous threat of new entrants. There are many that are looking for new and diversified solutions with banking. The current trends began in 2007 when there was an unraveling of the current banking system through the economic crash, specifically which pointed at the corporate banks as being responsible for the economic crash. Many are now considering a second economic crash that is based on the bailout reversing and problems which are coming from suits being filed and debt continuing to grow. The new entrants can move into the competing edge, specifically because of the changes which are associated with societal trends and the knowledge about the current economy (Jubak, 2011). Threat of Substitute Products: The problems with the banks and competition are also leading to a threat of substitute products. This is a smaller threat, specifically because it is difficult for a bank to substitute a credit card, savings or checkings account or other aspect of financial holdings. However, the competition can work toward providing better deals with customers, such as lower interest rates, low to no fees and compensation of money where others have policies against the money. The substitute products then come from the threat of having too much competition and the ability to create a difference in the way that most are looking at products offered by banks. Opening alternative accounts for any reason is now becoming easier for customers because of the high amount of competition that is in the banking industry. Bargaining Power of Customers: The main way to keep customers returning and loyal is to give them bargaining power. This becomes a threat to businesses because there is the need to continuously offer different options, specifically so those who are a part of the customer relations will come back. The banking system is known for keeping loyal customers, specifically because there is the ability to attach one to the offers then to keep them for an average of 2 years. However, the loyalty of customers becomes a threat if the attachment to deals doesn’t continue. Most customers have stated that they aren’t loyal or attached to a bank and would easily switch if a better offer arises. For any bank to counterbalance this loyalty, there is the need to connect personally and emotionally while continuing to provide deals that allow the customers to remain loyal to a specific bank (Shevlin, 2004). For Citi Bank, the concept of loyalty becomes essential when identifying the bargaining power of customers. The diverse products are needed to keep customers happy and to help with continuous changes that a customer may go through. For this to occur, the customers are given bargaining power, specifically on the types of fees that are competitive in the field as well as what will allow the customer to remain loyal to Citi bank. The bank is responsible for providing several options and alternatives, as well as working with the prices, rates and fees to ensure that the customers are able to look at the bank as competitive and as being a main part that is associated with the bank. Bargaining Power of Suppliers: There are three main suppliers that are associated with any bank. This includes suppliers of depositors, the credit market and the central bank. It is known that the depositors don’t have any bargaining power, specifically because they are only responsible for the transaction of depositing and withdrawing the same amount of money. The credit market and the central bank; however, can change the amount of supply according to the industry, economy and the social trends. Interest rates can alter, stakeholder investments can fluctuate and the central banking system can determine how much should or shouldn’t be given to a specific bank. The suppliers are then able to define how many products can be offered, what grows or declines and how the resources can be guided. Even though there are options to request as many funds as needed, this is dependent on the segmented options that are provided, specifically with the credit market (Ackerman, 2008). Competitive Rivalry Within an Industry: Each of these components relate to the rivalry within the industry as well as the amount of competition that takes place. For the existing banks, the products and the services don’t change, specifically because there are required minimums and caps that a bank can offer. However, within this, is the ability to fluctuates the products and services and to begin changing the products that are offered. The competition with other banks as well as the expectations that are associated with the banking system provide different alternatives for the growth of Citi Bank and offer the need to continuously diversify and remain competitive within the business. E-Business Strategy The e-business strategy which needs to be adopted by Citi Bank provides different types of insight into the capacities which are available for the products and services. In 2008, Citi Bank launched an e-business strategy that was specific to Internet banking and which would help to drive forward the technological relationships to banking. The current strategy is one which has integrated the products and services of the internal organization to an online reflection of the company. This includes online services for customers that want to sign in for transactions, pay bills online and to manage their investments through the specific area. The online area is reflective of the small and large business investments as well and provides specific areas that allow customers to use the online banking system for all of the specific needs within the corporation. By reflecting the corporate strategy, there is the ability to create a different reflection of the business while showing the specific needs that are associated with the company (Ebusiness, 2010). Products and Services The products and services which are suitable for Internet banking have already been incorporated into the main outlook of the company. The current products and services offered include options for existing customers and new customers. General banking, business alternatives, private investments, credit cards, mortgages and student loans are currently available. There are also options for lines and loans for both individuals and businesses. An individual has the capability of signing up for a new account as well as managing their existing account through automated systems that are online. These are all suitable for Internet banking and provide a main strength with the investments that are made through the online portal. The main objective has been to build paperless banking to customers and to businesses. The products and services which are not available or suitable for the Internet banking come from the larger investments, specialized needs, custom accounts and from the holding sector of Citi Bank. This creates some weaknesses as the larger investments also lead to security problems and hesitations by those that are using the online banking. Even though the investments, planning and the lending can be used adequately, it can be seen that there are many missing products and services, specifically in the area of investments. The needed technology and the transferred associations with the investments then lead to a lack in alternatives for the Internet banking needs. Customer Perspectives and Adaptation Even though there are some limitations to the Internet banking, the convenience which Citi Bank currently provides is able to offer more alternatives for those that are interested in Internet banking. The customer perspectives and adaptation are leading to many believing that Internet banking needs to be a driving force within any company. This allows customers to save time by transferring money online and to offering flexibility with investments and lending. Paying money online, adding in options for investing and looking at other options can provide options to save time while investing while stopping the complications which often occur with banking. The current trends with customers are divided into two segments. The first is based on the need to adapt the Internet banking for convenience and as an added value service. Others hesitate with this because of the security issues and problems which may arise with Internet banking, leading to a loss in money. The need to establish a strong trend with banking online while building security can provide different options with those that are interested in the online banking (Rajput, 2011). Global Perspective and Outreach Another concept to consider is based on the global perspective and outreach which is a part of the banking initiatives. The development of Citi Bank has led to initiatives with translating to Spanish online and to having global access to the bank. However, the perspective of reaching to other countries is limited by the popularity of the bank in the other countries as well as the attitudes about online banking which may be introduced at a global basis. There are several alternative trends that are in other areas that Citi Bank is located in, all which may not provide the same sense of security or convenience with online banking. At the same time, other trends may arise, such as the need to have online banking but not with the same products or services as another region of the world. Understanding the local differences, cultures and perspectives also alters what should be offered online while targeting those that are in various regions. While Citi Bank has initiatives with the overall perspective of the online banking, specifically by reflecting the corporate and foundational aspects, there are needs to change the perspective so there is a sense of loyalty that is built from the banking capacities. Performance Figures The performance figures which can be deducted from this analysis shows that Citi Bank is able to provide a strong Internet presence and e-business strategy. The capacity is one which is based on tapping into the emerging trends in society and in culture. However, there are also gaps in areas that don’t provide online services as well as with tapping into the local cultures and areas to offer different services and needs that are specific to custom and individual locations. The performance of Citi Bank, while remaining one of the highest in banking, is one which can also improve by looking even more closely at the trends and needs and altering the products and services offered by looking at niche markets and localities. Adding in more to the banking services and beginning to diversify with respect to one’s culture or specific needs will help Citi Bank to establish a stronger e-business and overall value to the business. Future Trends in Internet Banking The future trends in the Internet banking arena show unlimited possibilities for growth. For Internet banking to become a main trend, the obstacle of trust and security need to first be overcome. This should be combined with the need to create adaptation for those who are in need of specific lifestyle changes as well as alterations that come from the main obstacles many see with Internet banking. The trends of not having enough security, not providing diverse enough options for Internet banking and not having adaptability to individuals because of limits within technology all create complexities with those that are interested in the adaptation. However, this can alter with growth and with more enhancement of security that is a part of the consumer attitudes and responses from banks. Those who have used the brick and mortar stores are known to have a different understanding of the trends and the security of the business. However, an individual won’t respond to online banking unless tapping into the physical location first. This limitation is what will change with the future of banking, specifically as security issues can be altered and reinforced (Guinaliu, Torres, 2006). The trends for the future in Internet banking, when looking past the trends in security, is one which will help those who are interested in the banking system to have different alternatives and outlooks of what is needed for the options with banking. The concepts with having online services help with tapping into the main outlook of Citi Bank for financial management. More important, it establishes services that are ahead of the competition for those who are able to trust online services and which are interested in the growing trend. Even though there are some issues with security, there are many that can use this as an alternative service that is incorporated into the brick and mortar store. The future of Internet banking is one which can then continue to offer more services and alternatives for those who are interested in convenience and ease of use for banking. The capabilities which are associated with Internet banking are only beginning to become a main component of those who are interested in the services and are complimentary to services that are associated with brick and mortar businesses. However, the new area is one which is quickly growing into a trend of customers who are dependent on the Internet and pieces of technology, specifically so it can provide various alternatives to those that are interested in the convenience of the banking. This can lead to investments, accounts and other initiatives which can be placed online in the future. For Citi Bank, this can close some of the gaps that have occurred with the losses, specifically which are associated with the holdings and other investment areas that haven’t noted as much growth. As this develops, there will be more capabilities for growth among the company as well as tighter competition which is based on new initiatives, security features and alternatives for customers that are interested in Internet banking as a compliment to regular banking. Legal and Ethical Issues The legal and ethical issues that are established with the Internet banking through Citi bank come with the management which is required. It is expected that those who use the Internet banking can do so through automated systems and with 24/7 services. However, these conveniences also come with the cost of not having customer service available and not providing the correct management of the system. Unless there is an established segment that offers management, problems will arise with the banking. This is inclusive of security issues, management of funds of those who trust the Internet banking and options which won’t provide the same security as a brick and mortar business. Changing outside of the automation and into customer service can then create a different perspective with the services and eliminate some problems which may be created without the customer service provided (Stead, 2001). The legal and ethical issues are also related to policies, integrations of the system and the software that is used. One of the problems which have arisen with Internet banking is based on the bank policies and the inability to incorporate this into the main system. The software which is used is enhanced for businesses; however, it often doesn’t reflect the bank policies or the issues which may be solved when going to a brick and mortar area. This creates problems with interpreting behaviors, understanding how individuals may respond and interactions which can create problems that are a part of the main system. The policies can also lead to issues with security that aren’t solved and the inability to integrate specific components within the system. Each of these, while possible to upgrade through security, are limited by the system which is used and which automatically responds, despite the nature of e-business which is being created (Petrovic – Lazarevic, 2004). Conclusion The concept of e-business strategies for banks is one which has an integrated approach to brick and mortar businesses. The threat with banks is one which is continuing to rise, mostly which comes from the interconnections to the credit market and to the basic banking needs. This is also continuing to grow because of new individuals that are interested in the market and which are establishing new businesses that provide alternatives. The response to the economic crisis and the social trends which are now occurring are further demanding changes within businesses, specifically by establishing custom needs and programs that are in response to both the competition and to needs of individuals who are overcoming the crisis. The building of a global business also means establishing a stronger presence that is able to respond to these trends and other variables. Even though there are several demands and expectations for e-business, Citi Bank has the capacity of continuing to grow past the competition with the services that are offered. The business can provide better alternatives through the e-business strategy, specifically to build loyalty and convenience among customers. The several products and services that are provided can help with diverse options for customers while allowing Citi Bank to grow with the trends that are now occurring and with creating complimentary services for those that are already using the online portal. Closing some of the gaps of the bank through the use of the online portal while creating different alternatives for the demands can help the business to continue to grow and incorporate a strategy which is reflective of the overall corporation. Reflection When writing this research paper, there was the need to analyze aspects about Citi Bank from both the internal and external environment. I found that the foundation of the business, diverse products and services of Citi Bank and the incorporation of the e-business were all related, specifically with the concept of growth within the business. However, this was also combined with the understanding of the external environment and the responses occurring in society. The movement toward globalization, consumer trends and demands and responses to the economic crisis has created changes within the bank, specifically to establish loyalty, strong relationships and valuable customer service. This was noted because of Citi Banks strong presence of social commitment noted on their website as well as how this was the driving force of their financial ideologies. The concepts of Citi Bank that I noticed when analyzing their overall presence then related to the ideas and trends which are a part of the market. While I was investigating the different reports and ideologies which were a part of the banking system, I noted that Citi Bank had created a specific response to the theories which had been established. There are several who have analyzed the business, looked at the strengths of the company and which have noted the strong response that they have had toward the financial crisis and the development of social relationships. I thought that this was important to note as Citi Bank became a microcosm example of what is occurring in the industry at large. The theories of the SWOT analysis, as well as the Porter’s Five Models could directly be seen with the actions which Citi Bank was taking as well as the ways in which they were growing their business, both physically and through online portals. The e-business strategies portion of the paper was one which I thought was interesting but which continues to create questions. There was a focus specifically on e-business only as being capable of being implemented through the use of banks and in relation to business and customer needs. However, I felt like there were gaps and pieces of missing information that should have been required with the analysis of the business. First, there wasn’t the ability to create an understanding of the software, processes and the implementation of the programs for Internet banking or for the strategies. Second, there wasn’t the ability to understand why and how Citi bank had decided to implement specific parts into the Internet system while eliminating others. This would have made a difference in the overall analysis with an understanding of the e-business strategy and why it created strengths and weaknesses for the company. My learning process through this specific report is one which has given me insight on the theories and how they can be practically applied to any given business. More important, there is an understanding of what a company needs to do to continue to grow within a company and how this should be associated with the overall ideals and foundations that are a part of the business. The practical application through the case study and the ability to analyze the main components of Citi Bank have allowed me to gain experience and understanding of how a business functions and responds to trends within society. References AAP. (2011). “Bank Competition Findings to Be Released.” The Sydney Morning Herald. (May). Ackerman, Jules. (2008). “The Banking Industry Problems and Competition.” Retrieved from http://searchwarp.com/swa292998.htm. Citi Bank. (2011). About Citi Bank. Retrieved from: http://www.citigroup.com/citi/homepage/index.htm. Ebusiness. (2010). “Citibank’s e-Business Strategy for Global Corporate Banking.” Today’s News. Retrieved from: http://www.ebusiness.com.pk/2010/07/23/citibanks-e-business-strategy-for-global-corporate-banking-2008/. Guinaliu, M, E Torres. (2006). “How Brick and Mortar Attributes Affect Online Banking Adoption.” International Journal of Marketing 24 (6). Jubak, Jim. (2011). “The Next Banking Crisis on the Way.” MSN Money. Retrieved from: http://articles.moneycentral.msn.com/Investing/JubaksJournal/TheNextBankingCrisisOnTheWay.aspx. Petrovic – Lazarevic, S. (2004). “Nature of E-Business Ethical Dilemmas.” Information Management and Systems. 14 (5). Rajput, Nidhi. (2011). “E-Banking Strategies.” Retrieved from: http://www.scribd.com/doc/53792862/13/E-BANKING-STRATEGIES. Shevlin, Ron. (2004). “Earning the Loyalty of Banking Customers.” Client Choice (September). Stead, BA. (2001). “Ethical Issues in Electronic Commerce.” Journal of Business Ethics 15 (6). Read More