InformationWeek

May 3, 1999

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Banking On E-Business

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This month, Citigroup will launch a suite of Internet corporate banking services that it has been testing with 12 business customers, Williams says. Last week, Citigroup brought out a business-to-business E-commerce system called Citibank Commerce. Initially available in the Asia-Pacific region, Citibank Commerce lets users order products, monitor order status, and complete settlement and reconciliation processes. The software, which is priced in the tens of thousands of dollars, uses smart cards, passwords, and digital certificates for security, and is tied into the Citigroup network.

A series of moves during the past year have positioned Citigroup to be a major player on the Web. Executives expect an August 1998 deal with Netscape--in which Citigroup is the anchor tenant on the Netcenter Personal Finance Channel and displays its brand on Netcenter's home page--to build a Web presence for the company from exposure on a major Internet portal. The Personal Finance Channel provides financial advice, news, research reports, and interactive tools for investing and other transactions. Citigroup plans to begin offering online banking, insurance, and mortgage services on the site in the next few months.

The Netscape deal gives Citigroup the opportunity to attract customers from about 150 countries at a much lower cost than if it had to open retail branches in all those areas, says Josh Grotstein, e-Citi division executive for global Internet and E-commerce programs. "The portal is the first global medium," Grotstein says. "We can buy space and time on these to gain more reach into customer segments than we've had before." Citigroup is looking to acquire space on different types of portals, Grotstein says--more demographically specific, niche-oriented portals, for example, and some outside the United States.

Analysts say the portal strategy is a savvy one for Citigroup. "The [Netscape] deal is emblematic of Citi's recognition that they've got to be where potential customers go," says Forrester Research's Doyle.

In an earlier deal with Netscape, Citigroup licensed the vendor's CommerceXpert line of applications and server software. Among other projects, e-Citi is using the Netscape technology to build an electronic bill presentment and payment system. To support that effort, Citi took an equity interest last September in TransPoint, a back-end fulfillment service in development by Microsoft and First Data Corp. Citi will begin offering services through TransPoint in the next few months.

Horowitz says electronic bill presentment is a critical component of E-commerce, one that will help attract customers to its other online services. "We view it as a way to provide `stickiness' to the Web site," he says. "People who come to Citi's site will see `you have mail' and `you have bills,' and that will suggest they come back to us every day."

E-Citi is also developing an electronic "wallet," a product that makes it convenient for users to buy goods and services on the Web by storing information that E-merchants commonly request during the transaction process. Users enter data, including name, billing and shipping addresses, and credit- or debit-card information, into the wallet.

"Most merchants ask for the same information, and people get tired of typing it in each time they want to buy something," says Gail Hoffman, VP for E-commerce new business development. "This is a secure and private container of information." Citigroup isn't the only company developing an electronic wallet--Microsoft unveiled plans for one earlier this year. Citigroup sees it as another way to attract customers. Hoffman says people who opt to use the electronic wallet will be introduced to the company's other services. Citigroup expects to introduce the wallet in select markets by the summer and nationwide by September.

Access: Customer's Choice
Another e-Citi strategy to attract customers is to make all electronic services available through an ever-widening variety of distribution channels. "We want to let people use any kind of device, anything with a screen that's capable of connecting to a network from anywhere, to transact with Citigroup," says Alan Young, a VP of e-Citi who's responsible for access devices and distribution technologies. "Customers should be able to choose how they want to talk to us."

Citigroup executives believe the cellular phone has enormous potential as a distribution device. The company recently began a trial service in Singapore in partnership with carrier Mobile One that lets users perform retail-banking functions such as opening accounts and transferring money by using cell phones equipped with screens.