Online Community

Citibank looks to forge customer loyalty with new online information and services

By Sana Siwolop

itibank, the bank that likes to say it "never sleeps," is finally waking up to the business opportunities that are offered by the Internet.

Unlike other top U.S. banks such as BankAmerica and Wells Fargo, Citicorp's consumer-banking unit has taken its time rolling out a full line of World Wide Web services like home banking. In late July, Citibank signed a multiyear agreement with the Mining Co., a builder of virtual communities, that may help banish the bank's reputation as an Internet Johnny-come-lately. The deal could also help Citibank to forge customer loyalty and attract new customers.

Citi bank is obviously worried about the intense competition that's heating up to offer consumers personal finance information online. It's competition that's being fostered by other banks, as well as by companies such as Intuit and Microsoft.

Still, Citibank clearly seems uninterested in simply bombarding consumers with a mountain of online information and services. Rather, the bank wants to harness the Mining Co.'s ability to build virtual communities over the Internet as a way of fostering intense, long-lasting relationships with its customers. "We're excited about this arrangement because banking is about relationships" says a company spokeswoman. "We're looking to build communities, not just offer a pure marketing brochure online." Citibank IT officials declined to comment.

"This move finally puts Citibank on the Internet map," says Mildred Wulff, an analyst in the digital commerce group at Jupiter Communications, a research and consulting firm in New York. "Consumer education and a friendly atmosphe re are Citibank's silver bullet."

Citibank's other silver bullet is the Mining Co., which has been building virtual communities since last April. Its first site was an Internet service that now contains 500 special-interest sites. Those sites, according to Mining Co. documents, are "powered by people, not machines." They're manned by "guides," people who have undergone the company's patent-pending MiningPrep training program to search the Internet for the most relevant nuggets of information on a particular topic, whether it's child-rearing, horror movies, wine, or interest rates.

As part of Citibank's agreement with the Mining Co., the bank wants the New York company to develop a customized version of its Internet service that will be integrated seamlessly into Citibank's Web address. Citibank, which has more than 50 million customers in 56 countries, also wants the Mining Co. to help develop a Citibank network of bank-specific, special-interest sites.

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The bank hopes those sites will do two things. First, they should give consumers-both Citibank customers and others-real-time access to Mining Co.-trained bank representatives. These reps will field questions and steer consumers to information on specific financial topics. The sites should also let consumers talk to one another through features such as bulletin boards and chat rooms.

According to industry analysts, Citibank's chat-room feature will be a first for the banking industry. At Citibank's current Web site, for example, consumers can communicate only with Citibank representatives, and only through E-mail. "Most banks' Web sites make no attempt at consumer participation," says Jonathan Spira, a senior managing director at the Basex Group, a New York research and consulting firm. "It's one of the banks' greatest nightmares. They're worried consumers may do things like bad-mouth rates."

Spira applauds Citibank's bravado. "Citibank is doing the one thing that will give it a prominent place on the Web, and t hat's building virtual communities," he says. "They're also replicating online what they do so very successfully offline-bringing people together in real-time settings like forums and networking groups."

If all goes according to plan, consumers will be able to access Citibank's new Mining Co.-developed services early next year. For now, however, the companies are developing a prototype that will more clearly spell out the breadth of information that the service will offer, as well as the back-end hardware and software that will be needed to support it.

The Mining Co. agreement is just one of Citibank's recent efforts to make its Web site useful and consumer-friendly. Citibank still plans to eventually let Web users carry out banking transactions online, possibly by as early as year's end.

Indeed, Citibank clearly is trying to make up for lost time on the Internet front. For example, the bank recently became a sponsor of a customized news service that was recently launched on the Internet by Ora cle and CNN.

The bank has also been trying to ramp up the ranks of its Internet executives. In January, Citibank hired Edward Horowitz as executive VP. Horowitz, until recently, was CEO at Viacom Interactive Media. More recently, Citibank hired Josh Grotstein as its division executive for Internet and intranet initiatives. Grotstein, a former Prodigy Services executive who managed the content created for that company's online offering, reports to Horowitz and is in charge of driving the bank's global Internet development efforts.

What does the Citibank deal mean to the Mining Co., whose technology, according to industry analysts, is still relatively untested? There's no question that Citibank's huge customer base may give the Mining Co. a large testbed for its business model. Still, until now, that business model has relied mostly on generating revenue by way of advertising. Does the Citibank agreement represent a switch?

"Our company really is still too young to say whether this represents a business-model change," says Jeff Radov, head of the Mining Co.'s new-business development. "From the very beginning we had hoped that we could expand the ways in which we engaged customers, and we hope this will be the first of similar relationships with other corporations."

Radov says the Mining Co. is exploring similar Internet development deals with companies in the travel, health care, and telecommunications industries. Here, he says, the company hopes to tap into the long-standing industry experience that many of its executives bring to the table. "We may be a fairly young company," Radov says, "but we have fairly senior managers."

Citibank hopes to roll out its Mining Co.-developed services in the United States first, but its goal is to make them available in other countries as well. That will require a fair degree of customization.

What about plans to customize the Mining Co.'s existing Internet service? Citibank plans to offer consumers most of what the Mining Co. already makes available. Because the Internet is an unpredictable and uncontrolled environment, the bank still plans on regularly monitoring the offering. Nevertheless, Citibank still plans to let consumers access any information that the Mining Co. now offers about competing financial products and services.

As analysts see it, that kind of openness will probably serve Citibank well down the road. Both Intuit and Microsoft already let consumers who access their online offerings compare competing financial products. "Citibank will probably need to do the same in order to stay competitive," says Wulff of Jupiter Communications.

Wulff also says Citibank will eventually need to leverage the Mining Co.'s skills to build virtual communities around non-banking products as well. "Every bank's dream is to own its customers," she says. "The goal i s to insert your brand into many, if not all, of the important aspects of a customer's daily activities, whether it's travel, sports, or gardening." Even sleeping?

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