Citibank's e-Business Strategy

for Global Corporate

Banking

Sources of competitive advantage.

Cost structure of a business
Ability of that business to differentiate itself from
competitors
Cost and price advantages can be achieved through:
Operational effectiveness - doing the same things as your
competitors do but doing thembetter (better technologies,
superior inputs, better trained people, or a more effective
management structure)
Strategic positioning - doing things differently from
competitors, in a way that delivers a unique type of value to
customers (offering a different set of features, a different array
ofservices or different logistical arrangements)

Strategic positioning
Start with the right goal: superior long-term return on
investment; real economic value is generated by
grounding strategy in sustained profitability.
Deliver a value proposition, or set of benefits, different
from those that competitors offer; Citibank should
compete by delivering unique value for customers.
Reflect strategy in a distinctive value chain, or
perform different activities than rivals or perform
similar activities in different ways, rather than focus on
adopting best practices;
Citibank's processing transformation is a good example
of developing a distinctive value chain.

Strategic positioning
Offer trade-offs or be willing to forgo some product features,
services or activities in order to be unique; Citibank's aim is
to web-enable all of its products, which involves forgoing
services that support legacy infrastructure.
Ensure that all the elements of what the company does fit
together; when all activities at Citibank are mutually
reinforcing, it makes the strategy harder to imitate.
Ensure continuity of direction, even if that means
abandoning certain opportunities; continuity of direction will
help Citibank develop unique skills and assets or build strong
reputations with customers.

USP- Citibank
Citibank is not competing on cost; it differentiates
itself through delivery of service
CitiDirect, in particular, is different from other
Internet solutions available because of its
globality and reliability.
The value of Citibank's on-line offering is that
customers have access to Citibank's wide
network and robust back office (regionalised and
specialised cash-processing centres)
Restructuring the processing business and
advanced technology projects place Citibank in a
level of specialisation and expertise

Skills and resources that foster

differentiation

Strong marketing abilities

Product re-engineering
Creative talent and flair
Strong capabilities in basic research
Corporate reputation for quality or technical leadership
Long tradition in an industry or a unique combination of
skills drawn from other businesses
Strong co-operation from channels
Strong co-operation from suppliers of major components
of the product or service

Organisational requirements to support

and sustain differentiation activities
Strong co-ordination among functions in R&D,
product development and marketing
Subjective measurement and incentives instead
of quantitative measures
Amenities to attract highly skilled labour,
scientists and creative people
Tradition of closeness to key customers
Some personnel skilled in sales and operations technical and marketing

Differentiation
Opportunities

Citibank Differentiation

Rivalry is reduced when a

business successfully
differentiates itself

Citibank's focus on transforming its transaction

processing back-end activities required a significant
exchange of information and a major standardisation
process, as well as huge technology investments, which
means it would take time and resources for a competitor
to replicate the value-chain activities.

Buyers are less sensitive

to prices for effectively
differentiated products

Citibank's customer strategy focused on large global

corporations and institutional investors and offered a
broad range of products for global customers (with a
special emphasis on products in which Citibank has
distinctive capabilities, such as FX and securitisation).
Serving Fortune 500 companies allows Citibank to focus
on these companies' complete needs and requirements.

Brand loyalty is hard for

new entrants to overcome

Citibank has developed a global brand, making it difficult

for other banks and new entrants, in particular, to
compete.

Differentiation
Opportunities

Imitation narrows
perceived differentiation,
rendering differentiation
meaningless

Citibank Differentiation

Citibank's focus on transaction processing as a

differentiating factor would help Citibank create more
or new sources of differentiation. Citibank's offering of
information on the Web and its ability to extend
additional functions and valued intermediation translate
to time value and content value, which are strong
propositions.

Citibank is committed to investing in new products. Its

Technological changes
nullify past investments or development of an integrated solution, for example, is
particularly appropriate for Citibank's strong corporate
learning
contacts and worldwide geographical spread.

The cost difference between

low-cost competitors and the
differentiated business
becomes too great for
differentiation to sustain
brand loyalty

Doing business with Citibank costs more when

compared with other banks, but Citibank has loyal
customers who are willing to pay extra.

 Fundamental to developing an e-culture is a

demonstration of Citibank's commitment to:
improve processes
develop mutually beneficial relationships with its
suppliers and clients
promote an attitude towards partners of mutual value
addition and sharing
implement employee programmes focused on
delivering the tools and information
needed to excel
provide room for entrepreneurial growth backed by an
excellent infrastructure

Benefits for B2B Billers

Benefits for B2B Payers

Reduced billing costs

Streamlined segregation, routing,

matching and approval of
bills/invoices

Shortened billing/receivable
timelines

Automated reporting and analysis

Improved cash forecasting

Automated payment scheduling and

initiation

Accelerated payments

Reduced payment-initiation expense

Enhanced trade credit management

Facilitated adjudication

Reduced payment-processing
expense

Automated accounts payable posting

Automated accounts receivable

posting

Targeted goods/services information

Marketing and customer service

advantages

Simplified customer serving

Challenges

Options/Solutions for Citibank

1. Entitlements, or the
issue of precisely who
within a corporation is
authorised to pay bills

A handful of individuals have the power to

release money -issue each one a digital
certificate with a set of individualised
authorisation levels

2. Integrating all
processes rather than
treating them as isolated
services

Partner with software providers to provide

customers with an integrated service in epayments, including invoicing, collections,
settlement and credit
Alternatives in partnering: (1) team with a
company such as BankServ that preserves the
look and feel of its individual bank partner's
site (2) buy custom software and sell the
applications directly (3) partner with
application providers that host and run various
applications at their own data centres