This post shares how trends in digital banking have helped shape Citi's global digital strategy. It summarises some of the fascinating insights shared with me by Aditya Menon, Managing Director, Global Digital Strategy at Citi.

Citi has built a global digital strategy across their Corporate Finance, Retail Banking, Investment Banking and other business units. This posts shares the crux of this strategy, the thinking behind this strategy and how it has resulted in the launch of recent award winning services.

The Crux of Citi's Digital Strategy

Citi plays so many different roles around the world, in Corporate Finance, Retail Banking, Investment Banking and more. So their digital strategy had to support all these areas. To achieve this Citi shaped a strategy to deliver on three key imperatives:

1. Customer Centric: From a digital perspective this requires that the bank track metrics such as net promoter score, to recognise and reward the segments they want to serve with valuable personalized services.

2. Globally Common: As Citi serves approximately 200 million client accounts and operates in over 100 countries, the challenge they address is to deliver globally common services across all these markets. For instance, taking the example of high net worth individuals, they do have certain globally common needs which Citi identifies and helps to address.

3. Digitally Connected: Citi places a great deal of importance on creating digital partnerships. Financial flows are digitising, and Citi needs to be in the middle of those flows, to drive greater access to their core products through digital channels and strategic partnerships.

The thinking behind this strategy

Citi arrived at this digital strategy after studying how digital disruptions eroded value across multiple industries including news, travel, video, music and advertising. Across these industries they found that over 10 years there could be a substantial market share shift. Assuming year zero as being the peak of physical manifestation of an industry, Citi saw a typical trend play out for each industry. An initial gradual decline was followed by an inflection point between year 2 to 4 and then a rapid transition from physical to digital.

In most of these industries the disruptor was not one of the incumbents. In most cases the total revenue of the entire industry declined over time due to disruption and commoditisation and revenues never really returned to the earlier peaks. This is interesting as it means that fewer players at end of year ten have to share a smaller pie and a number of incumbents make a loss.

Extrapolating this to the US retail banking market made it clear to Citi what strategy they had to adopt. They concluded that there would be a substantial share shift over 10 years. Looking at payment and retail banking industries separately they expect retail banking to see even more disruption than payments in terms of value. Over 10 years the laggards could lose a major share of their revenues and profits, while leaders will gain moderately. So clearly it pays to be a leader, and as a laggard one could get into a vicious cycle which takes you down a point of no return. This led them to conclude that Citi must therefore rapidly enact a strategy that would help to best position the bank with respect to the digital disruption trends across the world.

What the strategy has enabled

This strategy of globally common enablers has led to the launch of their retail banking mobile app, CitiDirect BE Mobile and the Citi Wallet launched in partnership with MasterCard. Citi was also one of the first banks to launch with Apple Pay. Their contextual offer and wallet platform recently launched in Hong Kong goes beyond the ordinary, to create contextual experience using location based services.

In pursuit of innovation

Citi is now engaged in an ongoing process geared to achieving high levels of innovation despite its size and global footprint. The Citi mobile challenge initiative now in progress is one of the ways they look to achieve this. The US challenge in December last year has been followed by a similar challenge in EMEA.

Also the Innovation labs that Citi has set up around the world support the business of crafting new services for the future. Innovative work with their API opens up transformative potential through third party development. 

At a time when financial institutions must transform themselves in line with the demands of the economy and to support evolving customer needs, there needs to be considerable rebalancing within the business. Regulatory pressures and the need to balance AML requirements and security against innovation and superior consumer experience continues to make this process challenging. 

Having a clear strategy such as this is therefore vitally important to steer the bank safely through the years ahead, and innovation in the use of digital technologies is clearly seen to be central to this strategy.