Citigroup, From traditional banking to a world leader in digital banking
Citigroup the US global bank When the economic crisis in 2007 - 2008 almost went out of business has taken a step back to redefine the company revitalize strategy and change the core business to become the world's leading digital bank that meet the needs of people around the world in the digital world
Citigroup (“Citi”) began as the City Bank of New York in 1812 and has played an important role in the history of US banking from the Civil War to the Great Depression and the Financial Crisis of 2007-2008.
In the 2000s, Citi became a true financial supermarket, with many banking operations such as stock broker bond trading, insurance, and asset management. Citi strives to offer all things financial to everyone around the world including massive acquisitions.
One of the businesses that Citi has acquired is subprime lending which is the market that collapsed in 2007 and triggered the financial crisis, almost causing Citi to go out of business in 2008 before being rescued along with other banks with $45 billion in federal funds in exchange for Citigroup shares (Citi fully repaid the U.S. government in December 2009).
Jane Fraser
Chief Executive Officer of Citigroup
Jane Fraser then head of strategy and is now currently the CEO of Citigroup said that;
‘Crisis forced us to redefine and restructure the new company to create sustainability in the eyes of regulators, personal customers, corporate customers, and employees as well.’
Fraser concluded that Citi needed to focus on businesses that were eligible to win. Citi had to be smaller and more consistent to be stronger. Citi needed to return to its roots.
Firstly, Citi was and is a bank, not an insurance company, asset manager, hedge fund, or private equity company.
Secondly, what leaders do is that Citi has to maintain and exploit the universality. This is one of the unique advantages of Citi, which is especially valuable for multinational institutional clients who need a manageable partnership, transaction complexity, currency, and the risk of business complexity.
As a result, Citi has established Citi Holdings as an affiliate within its corporate structure to manage and sell non-core assets.
Citi exited more than 60 operating businesses in more than 40 countries, representing approximately $800 billion in non-core assets, or nearly 30 trillion Baht (more than Morgan, Stanley, bigger than Goldman Sachs, two times GE Capital), and about 100,000 employees, accounting for one-third of the employees who eventually leave the company.
Citi has shifted from an enterprise to a Product-Centric Organization is a Multi-Relationship Approach focused on the capabilities needed to improve the value and how customers get the services. This includes the products, services, solutions offered, and the process by which customers will interact with the organization.
Citi invests heavily in technology and other capabilities. It's clearly the best bank must be the best digital bank.
According to the Citi report, Citi has spent about 30 percent of its annual budget on technology and it has added thousands of coders, data analysts, and experts. It also partners with PayPal and Google to offer additional digital services such as digital checks and savings.
Citi transforms into a "Leading bank for customers that meet the needs of people around the world in a digital world" with a strategy based on 4 principles:
1. Be Clinical Evaluates businesses that Citi can maintain. or maintain a more market-leading position in the digital world
2. Be Focused Focus on investments and resources directly on businesses that can drive strong growth and improve long-term returns
3. Be Connected Create connections to benefit businesses together
4. Be Simpler Deliver simpler services, reduce procedures, rules, and hassles to better serve our customers and create new value for the stakeholders involved.
This led to a number of broader decisions, such as doubling wealth management and exits from its consumer business in 13 markets across Asia, Europe, and the Middle East where Citi has no scale to succeed.
Citi's transformation is a bold move. It takes a lot of courage to dramatically cut down on the organization and grow the business from a smaller core but stronger than ever before.
Citi was named as "World's Best Digital Bank" by Global Finance Magazine in 2020
Determining a clear company's position in the world is the ‘Key to Success’ beyond digital
An important lesson from the Citi case study is that the fundamentals of competitive advantage have changed to a world where you have to be better than your competitors in not just today's products and services only.
But what you should do is
Rethinking the value you create for customers, users, and society.
Defining new and different, capabilities and scaling it
Managing business portfolio under the previous model effectively
So you can save and build the future of your company. Even in the midst of all the uncertainties about technology, market structure, economic, and environmental conditions.
source : www.citigroup.com, Citi 2022 Investor Day (March 2, 2022), Mahadeva Matt Mani and Paul Leinwand (2021) [Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future]
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