Internet Banking at Citibank UK - Essay Example

What use is a better mousetrap if the mouse gets lost finding the cheese? Or worse, what if there’s a cat lurking nearby, ready to pounce at the mouse’s slightest movement? To find out, this researcher played the role of a mouse by navigating through the internet banking website at the U.K. branch of the biggest bank in the world. More than a decade ago, Internet Banking was hyped as an exemplar of a frictionless market (Gates, 1995), a perpetual cash generator that would suck in customers and spew out an endless profit stream. It was only this year that U.K. banks could honestly claim that Internet banking is, at last, contributing to the bottom line (Johnson, 2006). In this age when a few seconds delay is much too long, why did it take rich banks this long to do it right? Which brings us to our key question: are banks finally doing the “right” things “right”? Our experiment called for an evaluation of how basic marketing principles and the Internet were combined to produce a successful Internet Banking customer experience. Our findings will show if Citibank U.K. have done their homework, matching strategic vision with real customer needs. In the case of internet banking, this involves the attainment of near-frictionless commerce, allowing customers to connect to the bank and do business anytime and from anywhere, with speed and convenience, and hopefully with each transaction generating value for the customer and a tidy profit for the bank. White and Nteli (2004) in their article’s title asked an embarrassing question: some ten years after the hype began, “why are there not enough customers?” The estimated millions of customers and the billions in profits were not there. Since then, studies by Datamonitor (2004) and Deutsche Bank (2006) showed that of the U.K.’s 60 million population, an estimated 15 million or 25% regularly do banking transactions on the Internet. Offhand quite an impressive figure, but considering that 80% of households in the U.K. had multiple bank accounts (Cruikshank, 2000), and 40-50% of account holders in Sweden and Finland do internet banking (Deutsche Bank, 2006) – of course, there are only 14 million Swedes and Finns on earth – market penetration remains an issue that point to internet banking’s huge, promising, and untapped potential. This essay tries to unravel the mystery with a critical analysis of the internet banking capability of Citibank U.K. But before doing so, we briefly look at the findings of White and Nteli and other academics, and explain our basic method of primary research. A Problem of Banking or Marketing? White and Nteli (2004) argued that internet banking is not bringing in the expected numbers because of marketing issues related to five service quality attributes: credibility, security, product variety/diversity, responsiveness, and ease of use. They identified two customer clusters with different priorities: traditional customers with security and credibility concerns, and non-traditional customers focused on ease of use and responsiveness. Both customer clusters gave banks low scores on product variety/diversity, making the authors conclude that this is a potential source of competitive advantage. As White and Nteli (2004) and Kotler and Armstrong (2005) emphasised, systematic application of marketing principles continue to be an important weapon in the banking industry’s arsenal, especially in this age of intense global competition. Marketing enables the bank to create value that would attract customers, engaging and retaining them into a long-lasting and profitable relationship. Especially in this age when shopping for value could be done 24/7 at the click of a mouse, banks are pressured to minimise churn whilst maximising customer profitability. Several studies (Stevens, 2006; Wisskirchen, Vater, Wright, De Backer, and Detrick, 2006) show that churn or customer defection rates in key U.K. consumer industries increased from 16.9 percent in 2003 to 19.1 percent in 2005 and are becoming a continuous cause for concern among marketing executives within the top 1,000 U.K. companies. As U.K. consumers become more mobile, companies need to constantly formulate marketing strategies to improve and deal with this phenomenon. Marketers are now focusing on existing customer development rather than just new customer acquisition. Major changes have occurred in the traditional view of customer defection rates, most noticeably in the banking industry where churn has increased from -10 percent in 2003 to almost +20 percent by 2005. These studies showed that the supposedly massive rates of customer inertia in banking is no longer a given. Banks need to fight for every customer, not only to capture each one but, more importantly, to retain them. One economic justification for this mindset change was the research finding that “it can cost five times more to obtain a new customer than to keep an existing one” (Weinstein et al., 1999, p. 119). What started the trend towards customer loyalty was Reicheld (1994) who found that a 5 percent increase in loyalty can lead to a 25 to 85 percent increase in profitability. On the contrary, Reinartz and Kumar (2000) argued that whilst serving customers over a long period may be beneficial, long-term customers may not necessarily be profitable, and that managers should not equate customer retention with increased lifetime spending, decreased cost of service (scale economies), and lower price sensitivity. They concluded that companies should study if long-term customers stay profitable, implying that if they are not, the business must jettison those customers who eat into profits. These were the concepts in our mind when we decided to get into the Citibank website (http://www.citibank.co.uk), exploring its look and feel and the products offered, and evaluating the over-all Internet-based customer experience. In the process, we asked “what kind of customers does the bank want to attract”, “what sort of customer experience are we having”, and “is the bank doing a good job of marketing”? Citibank Website’s Convenience and Responsiveness Click on the link and you find yourself at clothes hanger-level inside a cabinet, giving one the impression of being in a clothes shop, which is not far from the sensation one gets upon entering Citibank’s Canary Wharf office. The image turned out to be a promotion for a Citibank Platinum Mastercard with a subtle invitation to spend £500 this Christmas. Site: Simple and Sticky Welcome to the world’s biggest issuer of credit cards (140 million cards in over 40 countries), the world’s first user of Internet banking, and the world’s Best Internet Bank 2004-2005 according to Global Finance, all of which are claimed on its website. Despite the American bravado that may turn off people, we virtually entered the bank for a look around. Citibank is certainly good at getting a card into your wallet (I have friends with more than three Citibank co-branded – airlines, petrol, retail shops, Visa and Mastercard – cards). A master driver of conspicuous consumption, the bank has transformed card marketing into an art, offering free membership fees for the first year, dispensing reward points and rebates, and a wide choice of colour branding (silver, gold, platinum, titanium, and black), all of which are marketing techniques it pioneered. A “smart move” tip (such as “Learn how to save on your mortgage…”) enchants the index finger to keep on clicking until near-hypnosis kicks in, which the website does with low-key simplicity and speed much like in a Middle Eastern bazaar where exquisite goods are hidden at the back of the store. If one is not careful, you enter to buy a bag of tea and come out holding a camel. Navigation: Intuitive and Logical The website’s clean graphics is fast and attractive, in contrast with HSBC’s which we checked for comparison. Although colourful with its red logo, HSBC’s website was slow. The Citibank home page shows five products (cards, low-interest loans, insurance, fund transfers, and a television as incentive to bank online) and links to its security policies. There is no clutter, but the absence of colourful graphics is not attractive to young customers, which hints at the bank’s ultimate target market: serious, sophisticated working men and women with incomes above a certain level. The result is a snobbish appeal that screens customers with the subtle message that “we respect you, but if you don’t like our home page, then you don’t belong here”, which can be a disgusting way of putting into practice the findings of Reinartz and Kumar (2000) that customers must be profitable. However, Citibank cannot know every first-time customer, so every page on its site has a link to the bank’s main product lines. Just below the drab logo is a list: Current Accounts, Cards, Loans, Savings and Investments, Citigold (for high net worth clients), and Insurance. A click brings you to a page with a one-line description, except for its Citigold page where a paragraph’s worth of explanation entices you with the bank’s wealth management credentials. The site’s practicality may be sickening for some customers but appealing to busy, potential customers searching for key information. Home page and telephone numbers are accessible at each page, but contacts are limited to e-mail, application forms, product inquiry form, and a toll-free number. Installing a live web chat link would have been a vital improvement as this would be a time-saver for the kind of customers Citibank wants. Accessibility, Compatibility, and Speed On the day we accessed the site the first time, we typed “citibank uk” on Google and the first address that came up was the Citibank U.K. website. The next six addresses referred to product pages, whilst the rest referred to articles on Citibank’s security issues (like a Russia-based phishing scam) within the bank’s website. This shows good internet marketing technique as the site has been search engine optimised, “trapping” customers with official explanations from the bank itself. Access using different browsers such as Mozilla Firefox, IE 7.0, and Safari did not show much difference. There were no ugly pop-ups, and aside from the pesky moving clothes cabinet on the home page, each page we went through never contained movement. Dry perhaps, but fast. This may not appeal to the MTV crowd, but for those looking for short, clear, and fast information – the crowd Citibank wants to attract – just perfect. Content: Quick but not Hard Sell One-line descriptions of products and services may have mixed appeal, such as “If you need a loan, why not get a better deal?” for loans, “No annual management fee, £500 interest-free overdraft buffer, Low cost international transfers” for current accounts, “Providing products to suit your needs” for credit cards, “Introducing our new instant access 5.20% gross” savings and investments account, “Citigold Wealth Management”, “Insurance”, and “International” for complex products aimed at sophisticated customers. Even better, on each page are five or so main products with short one-line explanations that pack as much content on the product, with a clickable link should one desire to obtain more details. Unlike other banking websites that put too much information on the page, making it even more difficult just to make the decision to inquire, the Citibank website allows you to request for more information (click “Get Details”) or apply with one click (click “Apply”). These features provide convenience and enhance responsiveness. When we decided to inquire about credit cards, we received a detailed response by e-mail within a day and an invitation to call a toll-free number or to e-mail when they could call us back should further information be necessary. As an added detail obviously aimed at improving customer convenience the letter size of every page on the site could be enlarged with just one click (a choice of three sizes). Access to one’s accounts is fast and convenient. According to a friend who has multiple accounts with the bank, she regularly uses the website to check on balances, download credit card statements, perform current account transactions, transfer funds from one account to another anywhere in the world, or pay loans (Morgan, 2006). Safety, Credibility, and Trust One argument of White and Nteli for the low take-up of internet banking is related to safety, credibility, and trust issues. The increasing cases of fraud, identity theft, and phishing scams are threatening the growth and viability of internet banking. Like all banking websites, the paramount nature of security of on-line transactions is emphasised by the presence of clear guidelines aimed at educating the customer about current threats with an easy-to-do solution: Be Careful! To drive home the bank’s concern, every page on the site has a link to “Security” options just beside the “Contact Us” link. This is where Citibank’s transparency enhances its credibility. As we mentioned, Citibank’s phishing problems last year were serious, so any customer who Googled “citibank uk” would not miss seeing the article. Knowing this, Citibank included a link to an article on phishing on its site, making it easier for first-time users to be educated on how to avoid it. One suggestion we can point out is the site’s ability to recognise an existing customer. The use of 128-bit encryption and a randomly generated screen keyboard are added safety features for customer recognition, but generating a Turing number and a browser recognition algorithm similar to that used at other internet payment sites such as e-gold (http://www.e-gold.com) would add a tougher-to-hack and phish security layer, further enhancing the site’s security and the bank’s credibility and growing an increasing share of the customer’s trust. Example of Integrated Marketing Kotler (1999) emphasised the importance of integrated marketing communication in recognising all contact points where the customer may encounter the company, its products, and its brands. While each brand contact may deliver a good or bad message, the company has to deliver a consistent, positive message on all contact points. Citibank’s website does this for its target market. A study of the annual reports of the U.K.’s Big Four High Street banks in comparison with Citigroup’s showed that each of the banks is targeting similar (working men and women and high net worth individuals) target groups, consistent with its choice of marketing support activities. As an example, whilst the High Street Big Four like Barclays and HSBC target students and immigrants by giving away MP4s and Premiere League tickets, Citibank gives away televisions and iPods only to those who do internet banking or transfer credit card balances to any of Citi’s cards. Citibank would rather steal profitable customers than develop them, a pathetic move perhaps, but nevertheless a good and logical one business-wise in a highly competitive world. End Result: Quality Service Experience The Citibank website is convenient and responsive and makes for a simple but quality customer service experience. Market segmentation, targeting and positioning are obvious from the site’s features which conform to target customer buying behaviour. Though merely a direct distribution channel, the Internet allows actual-potential and local-global customers 24/7 access from anywhere, enabling Citibank to be a serious player and explaining why it remains the biggest and amongst the most profitable banks in the world. It even includes a page on social responsibility to dampen any negative image its site’s efficiency may evoke. 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