Citi Case study assignment PDF

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MIS 760 – IT Strategy Case Study: Citibank’s E-Business Strategy for Global Corporate Banking

Tanisha Mandvikar CWID-10453025 Please prepare an analysis of this case. Your write-up should be 4 to 7 pages. Each of the following questions should be addressed individually:

1. What are the impacts of the internet on the competitive landscape of corporate banking? (Hint: use Porters 5 forces) Ans) Due to the rising number of competitors and the rise in internet technologies, Citibank decided to develop integrated solutions for its customers based on these technologies. They decided to build a web-enabled platform for their customers which provided various services.  Threats from Customers Citibank’s priority was to fulfill their customer’s needs, they faced many challenges in doing this due to the varying demands from them. Multi-National Companies needed a custom product according to their own needs, while Medium-Sized Enterprises were not ready to adopt internet-based solutions. 

Threats from New Entrants The entry of new corporations with better technologies, low cost, good customer service, and better usability for customers could pose a threat to Citibank.

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Threats from Substitutes Citibank was initially one of the few banks to adopt web-based banking technology. Even though most of the Fortune 500 companies chose Citibank for their online services it had threats from the other banks adopting better technologies and becoming the bank with more demand for their web-solutions.

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Threats from Rivalry among Traditional Competitor’s Some corporations were not convinced by the idea of investing in the new technologies, while other companies were more receptive to the idea of webenabled financial products. Deutsche Bank and Citibank were the two leading banks that agreed to invest a lot of capital in online services. Thus, other corporations could choose Deutsche Bank for their online services due to reasons like better service and low cost.

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Threats from Suppliers The technology providers could increase their prices at any given point or the service they provide could prove to be less efficient than earlier. This could cause a threat to Citibank.

2. What has Citibank done to differentiate its e-business products from those of its competitors? Ans) Citibank did the following things to differentiate its e-business products from its competitors:  Citibank provided their customers with a greater number of channels for accessing services like account balance inquires, completing transactions, requesting transaction statements, etc online and in real-time.  They developed Artificial Intelligence (AI) projects for auto-filling forms with customer's historical data.  Their platform had better timeliness, accessibility, responsiveness, and efficiency.  They offered clients with their relationship banking managers and consultants to provide them with solutions based on their specific needs.  Customers gained greater returns on their assets due to their cash management products.  They prioritized investments in technology to support the electronic banking needs of customers. 3. What can Citibank do to create competitive advantages? Ans) Citibank can invest and adopt the following technologies to create competitive advantages over other financial corporations:  Blockchain Technology: Blockchain technology will enable Citibank to improve its investment optimization, provide better security, and less error rate. This will lead to more customers being attracted to the bank’s services. This will also fulfill the bank's vision to reach global markets and “extend” their business. 

Data Analytics: Data analytics can be used to predict the behavior of customers. It can also help them calculate value and risk factors. This will ensure great efficiency and more profits. Citibank can then publicize promotional offers to those clients for dedicated promotions.

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Risk Management: They could improve their risk management strategies by developing contingency plans.

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New Products: They could develop new products to attract more customers.

4. How has Citibank successfully converted its traditional money management business into an e-business? During the process of transforming traditional assets to digital assets, what issues should a company like Citibank take into account to ensure successfully implementation? Ans) Citibank aimed to become the number one e-business enabler. They devised their established e-business strategy as “connect, transform and extend” to fulfill their company vision.  Connect- They aimed to enable their customer to complete their transactions online from anywhere across the globe with access to an internet connection. This allowed global companies to expand business in many countries while maintained control at regional or global centers.

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Transform- All capabilities of Citibank were to be provided through online services. Extend- They wanted to extend their business to new markets globally and gain more customers by designing new products and services. They aimed to enhance the system according to the demands of customers.

The six key elements of their strategy were as follows: 1. Embed Citibank as the trusted brand within communities 2. Build a network of strategic partners 3. Help customers to serve themselves 4. Web-enable core services 5. Create knowledge-based-e-services 6. “E-Us” 5. What actions has Citibank taken to serve the needs of two very different market segments, MNCs and SMEs? Ans) Citibank had taken the following necessary steps to fulfill the needs of MNCs and SMEs, both being completely different market segments:  Multinational Companies had the capital to invest in new technology without a reduction in their current resource costs. They could pay for Citibank’s e-business platform. MNCs required their interfaces to be custom-built according to their requirements. Citibank had made its customers a priority and hence they provided them with custom web-based solutions and services. 

Medium-sized enterprises did not want to invest in the web-based solution at the early stages. They did were not convinced by Citibank’s e-business strategy’s security. These concerns led to Citibank to invest in the security domain of their ebusiness. They deployed several security conventions like public access keys, private access keys, one-time passwords, and multiple authorization controls. Citibank also introduced a price inducement scheme for them so that SMEs could afford their services.

6. How has Citibank’s Cash and Trade Group managed to develop different e-business products for varied industries? With the market changing so rapidly, how does Citibank identify market needs? Ans) Citibank’s Cash and Trade Group services included fundamental products offered to their clients. They included various financial transactions like Foreign Exchange transactions, payment of trade transactions, deposits, and equities for their clients. The products offered to clients were categorized into three types:  Transaction Services: Cash management, Trading functions, and custody services  Corporate finance services: Working-capital finance, trade, and asset finance  Treasury market services: Foreign exchange and hedging Citibank’s strategy was focused on providing banking functions for target clients. Their target clients included MNCs, financial organizations, local companies, SMEs, and government segments. They identified market needs by offering hotlines and relationship

banking managers to customers. Their task was to understand customer's needs which helped them in satisfying their desires. 7. One of Citibank’s challenges is in managing vendors and suppliers without allowing them to exploit its clients. How does Citibank protect its clients from its strategic partners? Ans) Citibank was facing challenges to keep track of their client's needs due to constant changes in their clients and technology. This opened its doors to form alliances with Oracle, SAP AG, Wisdom technologies, Bolero.net, and Commerce One Inc. They formed a company together namely, Matrix.com which provided a platform for buyers and sellers in e-marketplaces with their services through multiple banks and financial corporations. Citibank undertook the task of monitoring the vendors and suppliers. To protect them, they made sure that their partners clearly understood their strategy and did not exploit the bank's current assets in the banking industry. Since Citibank bought value to their associates, they wanted them to keep in mind What the clients were interested in. Citibank later purchased Lava Trading to present its customers with benefits like a robust e-trading system and novel technology. 8. Prepare a SWOT analysis to evaluate Citibank’s e-business strategy. Ans) Strengths:  Citibank focused on its clients first and provided them with various financial services online based on their requirements.  The partnered with companies like Oracle, Bolero.net, SAP AG, etc to handle client needs efficiently.  They provided automated solutions by investing in AI projects.  Developed security procedures to solve concerns of customers and extend their business to global markets.

Weakness:  Their e-business solutions were expensive, and some companies could not afford them.  They would still have security concerns since technology keeps growing and so does the risk to manage it.  Customizing products as per client’s requirements can prove to be a lengthy and costly task as it requires more resources to be dedicated towards each client which also increases the period.

Opportunities:  They had more B2B and B2C clients investing in their solutions.  Provide paperless web b-based solutions to clients.  Invest in different technologies to gain clients.

Threats:  Competition in the market with other companies building similar products.  Security and other technical risks.  Maintaining the brand name in the market.

9. How does this case demonstrate the alignment of an e-business strategy with a company’s overall business strategy? Ans) Citibank aimed to expand their business to global markets. Their priority was to satisfy the customer's needs and secondary focus was on the products they delivered online. The popularity in internet banking led to them developing a strategy for their business. They developed a web-based platform for their clients. To fulfill their customer's needs they split their strategy according to the company size. Multinational companies required their solutions to be customized according to their needs, thus Citibank focused on fulfilling their needs. Medium-sized enterprises were not ready to invest in these solutions due to security concerns. This made Citibank develop security protocols to acquire SMEs. They also strategically partnered with other companies since they were not able to cater to all client needs. They allied with companies like Oracle, SAP AG, etc. Citibank focused on aligning their e-business strategy with the company’s overall strategy. 10. Beyond the case: Citibank has hit hard times in the last several years. Do you think the strategy described in this case helped in the decline or was this a bright spot? Explain your answer. Ans) In the start, their e-business platform was a hit and it helped them acquire many customers due to the services they offered online. They offered custom solutions to their clients based on their needs. After a while, they aimed to get rid of legacy systems. To do this, they tried to acquire SMEs as potential customers by solving their security concerns issues. In the later phase, it became difficult for Citibank to keep track of the custom solutions required by their clients. This cause the downfall in 2007, they also failed in their credit card service this year due to cost increments. But they still focused their attention on the customer and invested in new technologies like AI. This was a bright spot for Citibank as they managed to come out of a downfall with their innovative strategy. That is what a business should be about, focus on the goal no matter what comes your way....