InformationWeek
Defining The Business Value Of Technology
May 3, 1999
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Citigroup is dramatically expanding its Internet presence in an effort to approach its target of 1 billion customers
By Bob Violino
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itigroup, the financial-services giant formed by the merger last fall of Citicorp and Travelers Group, wants to be the leader in online banking and E-commerce in the financial-services industry. It wants a piece of the major portals on the Internet. And these are part of an even bigger goal: expanding its customer base from 100 million to 1 billion by 2012, Citi's 200th anniversary.The billion-customer figure, first articulated by Citigroup in 1997, is more of a "stretch target" than a do-or-die goal, company officials say. But it reflects Citigroup's effort to broaden its influence and reach dramatically, an effort driven primarily by IT.
Citigroup is preparing for the customer push with an aggressive E-business strategy that involves all aspects of its organization. The division Citigroup created two years ago to spearhead its E-commerce effort is working overtime to deploy new products and services. It's exploring radical ways to make it easier for customers to interact with the company. And Citigroup's traditional IT organization is making the infrastructure changes needed to support the company's online effort.
Citigroup isn't abandoning its brick-and-mortar constituency. But the greatest potential for gaining new customers and holding onto current ones, executives of the New York company say, lies in electronic banking and E-commerce.
"Our first step is to build an electronic presence that's as broad and generic as possible," says Ed Horowitz, senior corporate officer of Citigroup and head of e-Citi, the unit charged with forging the company's online strategy. Horowitz, who reports directly to Citigroup co-chairmen John Reed and Sanford Weill, is a principal figure in Citigroup's expansion plans. Horowitz came to Citigroup in 1997 in a high-profile move from his previous position as head of the interactive media division for cable TV giant Viacom (see sidebar story, "Mass-Market Approach").Formed in 1997, e-Citi has a staff of about 1,200, including managers, Web designers, and programmers, as well as marketing, distribution, advertising, sales, human resources, and financial personnel. So far, Citigroup has invested $160 million to $170 million in e-Citi. "We're creating a company from scratch and emulating everything Citi does," Horowitz says. The difference, he says, is e-Citi's emphasis on new approaches to IT, in particular the Web and thin clients.
E-Citi is creating Web content at a furious pace. When he came to e-Citi, Horowitz moved up the cycle of introducing online products, services, and upgrades to quarterly--"Web years," Horowitz calls it. For example, e-Citi is introducing versions of the Direct Access online retail-banking service with new features for savings and checking accounts, bill payment, stock trades, and credit-card transactions every quarter. Also, e-Citi will roll out banking, brokerage, and insurance products for the Web in the coming months. And the unit plans to offer a Web-based financial and investment advisory service, Finance.com, by August.
There's a reason for the hurried pace. Horowitz acknowledges that smaller, faster-moving Internet banking companies, such as Security First Network Bank and Scotiabank, are emerging to compete with established banks by offering more aggressive online services.
Citigroup is looking for its own competitive advantages on the Web, such as the ability to tailor the company's financial-services products to specific demographic groups. For example, Horowitz says e-Citi may create a "bouquet of services" geared toward young married couples between 24 and 35. And e-Citi is working on tailoring content-rich front ends for a younger generation of clients used to being entertained, interfaces supported by traditional banking services. "We can create a front end that has the hotness of MTV, but the account is the same," he says.
Citigroup is prepared to go a long way to grab customers. In addition to cross-selling its own banking, brokerage, and insurance services, Citigroup will eventually offer products from other financial-services companies over the Web in an effort to gain customers by attracting them to Citigroup's site, Horowitz says. Analysts say it's a risky trade-off. "The risk is, you make less in terms of operating profit, but you get more volume," says Bill Doyle, director of online financial services at Forrester Research. Still, it's a strategy Citigroup must follow to be successful on the Web, Doyle says.
continued...page 2, 3, 4
Photo by Edward Santalone
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