Transcript Citibank Online

Citibank Online
Living on the eBusiness Frontier - Part II
Annual Sponsors Conference
Center for eBusiness@MIT
Mark Parsells, President and COO,
Citibank Online
1/17/2001
Citibank Online Vision - Domestic
• The Citibank Online vision is to be the
leading “one stop shopper” financial portal
on the internet as measured by number of
customers, product revenue, retention rates of
multichannel customers, Citigroup cross-sell
revenue and industry rankings.
Citibank Online Vision - International
• Citibank Online role is to export our bestin-class financial services portal and to
strive to be the leader in each of the
countries in which we do business using the
same measurements as the domestic
business.
Focus of today’s presentation - Domestic
• Citigroup has local language banking sites
in 23 countries today and will be in more
than 30 countries by end of 2001.
• Recently launched “Citiworld” financial
services portal in Japan.
• Focus today will be the domestic business.
Internet Banking - Situation Analysis 1998
• 1998 industry players were rushing to
launch internet only offerings
• Pure play banks had huge valuations
enabling significant advertising spending,
fee waivers and high interest yield’s on
deposits
• Traditional banks like Bank One
(WingspanBank.com) and Citi (Citi f/I)
didn’t want to be left behind
What Online Customer’s Wanted in 1998
Summary of 1998 Research of on-line users:
• Important
– Price (no fees, high rates)
– Internet company that
“gets it”
– “Don’t make me deal with
a human”
– Performance, i.e., fast
response time online
– Single log-on for all
accounts
• Not Important
–
–
–
–
–
Value based pricing
Brand I trust
Security
Multichannel access
Customer service
Gomez Rankings in 1998
• Top five were pure plays
• Citibank’s Direct Access was #9
• Citi f/i was #17
Things Changed - Pure Plays Didn’t
Have a Sustainable Position
• Customers Changed - New on-line
customers were more like the general
population - not “early adopters”
• Perceptions Changed - Hype wasn’t
consistent with reality, pure plays had very
little market share relative to their media
status - the facts started becoming important
• Investors Changed - As P/Es became more
important than P/R’s, valuations plummeted
Customers Changed! What Online
Customer’s Wanted in 1999 and 2000
Summary of 1999 & 2000 Research of on-line users:
• NOT (As)Important
– Price (no fees, high rates)
– Internet company that
“gets it”
– “Do make me deal with a
human”
– Performance, i.e., fast
performance online
– Single log-on for all
accounts
• Not Important!!!!!!!!
–
–
–
–
–
Value based pricing
Brand I trust
Security
Multichannel access
Customer service
– Performance and single
sign-on still important
Most Customers Prefer a Choice
Electronic
Human-assisted
Digital-preferred
Human holdouts
Malleable middle
Old dogs, new tricks
Teller-tied
11.8
0
Average number of monthly transactions
Account opening
Problem resolution
Source: Forrester
Funds transfer
Balance inquiry
Cash withdrawal
Cash deposit
Check deposit
7.8
Perceptions Changed! - The Facts of The
Online Banking Marketplace
• Although “net banks” received a lot of air time they only
account for ~3% of the online banking customer.
• The real winners have been the “bricks and clicks” players
like Citibank.
Share of Market
97%
100%
3%
50%
0%
Money Center /
Regional Banks
Source: Recent press releases, trade publications
Internet-only
Banks
Perceptions Changed! Actual Customers
B&Cs Banks
Online HHs
Pure Play Banks
Online HHs
• Bank of America
3.0mm
• Security First
0.3mm
• Wells Fargo
2.5mm
• Wingspan
0.2mm
• Citibank
2.2mm
• NetBank
0.2mm
• First Union
2.1mm
• Chase
.75mm
Source: Forrester
•
Investors Changed! “Show me the
Money!”
•
•
•
•
NASDAQ plunged losing 50% of it’s value
VC money all but dried up
is now important important
Investors not willing to fund large
advertising campaigns or money losing
products
What’s the Result? The Power has
Shifted
• Pure Plays are starting to look more like
Traditional players
– Etrade bank has lowered it’s Money Market
interest by 1.25% in the last 30 days and will
likely go lower
– WingspanBank has implemented a wide array
of account fees and has slashed what they pay
for ATM rebates
– Juniper is trying to establish a branch presence
through Mail Boxes Etc.
Convergence of Business Models
Appears to Favor Traditional Banks
• Trusted Brands - financially secure
• High Quality Customer Service
• Established Multichannel presence
(branches with trained, bonded employees)
• Rich in Product and Feature offerings
Citibank Online’s Strategy
• Take the best features of Citi f/I and Direct
Access and converge them into one, stronger
“Bricks and Clicks” offering
• Position site as value oriented, feature rich
“one stop shop” that makes people lives easier
• Leverage Citibank’s brand reputation
• Emphasize multichannel offering
• Focus on security of funds and information
Tactics - Created and launched Citibank
Online in 90 days
• Used “accelerator” method to launch
Citibank Online
– Daily mgmt team issue resolution meeting
– Weekly Vice Chairman level issue resolution
meetings (No “dog and pony” presentations)
– Accelerated staff processes for HR, Legal and
expense approvals
– Hard work/little sleep
Result Citibank Online Launched on
10/1
Direct Access
(Transactional Engine)
“Citibank is a brand I trust”
Citi fi
(Internet Only)
“It’s easy to get started”
Combine the
benefits of
each channel
“Lets me control my
finances”
“Good value for my money”
“Always on the leading
edge of technology”
Financial Centers
(Terrestrial Only)
IVR, ATM, etc.
(Other Touchpoints)
Citibank Online
10/01/00
Citibank Online Sign-On Page
Citibank Online Customer Home Page
Front end is
Broadvision
portal formerly
used by Citi f/I
-Customizable
-Personalization
capable
- Content and
Feature Rich
Back end is
Direct Access
-Reliable
Transaction
engine
- Free Bill Pay
-Single sign-on
Key Customer Value Elements
•
•
•
•
•
“Citibank is a brand I trust”
– Rated #1
– Reinforced by Online Fraud Guarantee through SafeWeb (Travelers)
“Easy to get started with Citibank Online”
– No separate enrollment - Only CIN and PIN
– Single sign-on to all accounts
“Citibank Online lets me control my finances”
– Broad array of linked products and financial transactions
– 24 x 7 Service
– Customized home page
– 7-year statement history
– Multiple access/service points (Financial Center, IVR, ATM, Phone, Internet)
“Citibank Online provides me with good value for my money”
– Free online Bill Payment - no conditions
– Better incentives for accounts opened online
– Rewards clients for having higher balances (relationship pricing including credit)
– Financial tools, mutual fund and stock screening, portfolio tracker
“Citibank is always on the leading edge of technology”
– Wireless alerts/access, bill presentment, person to person payments, account aggregation
– E-Statements, online check imaging
Key Marketing Initiatives -Yield results
• E-Mail programs for acquisition and cross-sell, particularly
to70mm credit card customers
• AOL Permanent placement in PFC
• Other On-Line Partner deals (e.g., MSN, etc.)
• On-site “smart deals”
• Pay for placement on search engines
• Direct mail
• On line acquisition costs range from $0.40 to $54 per customer
• Trade Shows (e.g. Comdex)
• Integration into general media advertising
Great Placement on AOL
Results so far have been strong
• Reduced monthly operating expense by 50%
• Increased monthly new customer acquisition
rate by 56% versus prior year
• Cross sell rates are up 500% versus previous
sites
• Attrition rates are stable in spite of increasing
our number of customers
• Citibank Online has already been ranked #1 by
both Gomez Advisors and Forrester Research
Gomez 2000 Rankings
Top Internet Banks for Fall 2000 ranked by Overall Score
.
•
Firm
•
1. Citibank Online (review)
7.33
•
11. American Express-Banking (review)
6.45
•
2. Security First Network Bank (review)
7.25
•
12. Virtual Bank (review)
6.44
•
3. NetBank (review)
7.13
•
13. directbanking.com (review)
6.41
•
4. First Internet Bank of Indiana (review)
6.97
•
14. CompuBank (review)
6.40
•
5. WingspanBank.com (review)
6.95
•
15. American Bank/pcbanker.com (review)
6.33
•
6. Bank One Corporation (review)
6.93
•
16. BankDirect (review)
6.27
•
7. everbank.com (review)
6.87
•
17. Bank of America (review)
6.10
•
8. Huntington (review)
6.51
•
18. U.S. Bank (review)
6.09
•
9. Key Bank (review)
6.50
•
19. Fleet (review)
6.02
•
10. Wells Fargo (review)
6.49
•
20. National InterBank (review)
5.90
•
Source: Gomez Advisors, November, 2000.
Score
Key Challenges
• Achieving a true “best in class” customer service
– eCare (Chat, public e-mail, eStatements, check
imaging, etc.)
• Comprehensive Bill Presentment - scraping and scanning
(No strong vendor)
• Determining most effective marketing strategies
• Rationalizing all Citigroup offerings
• Rationalizing Global Citibank Offerings
and most importantly……...
Key Challenges
• Making sure we are right about the market!
– Closely monitor progress of competitors, still
take pure plays seriously
– Be ready to adapt quickly if we are wrong