FASTalert: Citi – A Technology Spending Star Rising In The East

October 19, 2010 0 Comments FASTalerts by Jack Dean

If you or your company has aspirations to grow your relationship with Citigroup, be prepared to go global and sharpen your retail banking business acumen.  Today, over 40% of Citi’s revenues come from Emerging Markets which include Latin America and Asia.  And Citi, who reported earnings yesterday, is signaling their intention to open the investment spending spigot to grow Emerging Markets even bigger, particularly in Asian retail banking.

Don’t let the asset sales trickling out of Citi Holdings, the bad bank holding tank, fool you.  Citicorp, the good bank, is poised to leverage its existing international muscle and build its retail banking base outside the U.S. in the fastest growing economies in the world.  Citi plans to use technology as a key marketplace differentiator.

A recent WSJ article pointed out that Citi is investing heavily in technology to support the expansion of its consumer-banking business in the Asia-Pacific region.  Asia-Pacific was the largest contributor to net income for Citigroup globally last year, and the company appears to be doubling down on its investment in this key region. They have begun to implement a business initiative dubbed the “smart-banking” model.

Jonathan Larsen, the Asia-Pacific head for consumer banking at Citibank, acknowledges in the WSJ article that “using innovation and technology to serve our clients” is a priority.  Some of the technology investments associated with the “smart-banking” initiative includes:

  • A new branch model that is paperless and wireless, incorporating interactive touch panels, video-conferencing capabilities and full-service banking from iPhones and iPads.
  • Out-of-bank authentication (allows a consumer to authenticate a PIN number via a phone call, thereby avoiding the PC channel with its inherent security risks)
  • ATM technology to automate transactions and extend self-service capabilities
  • Advanced mobile payment services, including mobile stickers (phone acts as a credit card)
  • Voice biometrics to identify a customer based on voice patterns

Today, nearly 98% of all transactions in Asia are via non-branch channels including mobile and internet.  Yet, as a sign of their commitment to the region, Citi plans to increase its branch network (710 at the end of second quarter) by 50% over the next three to four years.  According to Mr. Larsen, all of those new branches will be in the “smart-banking” format employing innovative technology to optimize costs and service its retail customers.

A technology spending star is rising in the East; the future of Citigroup is outside the United States.  Now is the time to take a global planning view of this international powerhouse.