Citicorp/Citibank: Retail Banking Critical Success Factors (CSFs)

Citibank Retail Banking Segment

Citibank is a financial services holding company with operations in more than 160 countries. Started as City Bank of New York in 1812, the company offers a range of financial services and products such as consumer banking and credit wealth management, securities brokerage, corporate and investment banking, and trade and securities services. The company operates in four key regions: North America, Latin America, Asia, and Europe, Middle East and Africa (EMEA) regions. In 2017, the company had over 209,000 and reported a net profit of $6.7 billion. The retail section reported revenues worth $32.7 billion and this was a 4% increase compared to the revenues reported in 2016 for the retail bank section. As a financial institution, the company operates three key business segments: 

  1. Global consumer banking – this consists of the retail banking and wealth management services such as residential real estate, small business banking, commercial banking, and asset management in Latin America. This segment also involves Citi retail services and North America and Citi-branded cards in all regions. 
  2. Institutional clients group – this consists of banking services such as investment banking, private bank, treasury and trade solutions, and corporate lending. It also consists of markets and securities services such as equity markets, fixed income markets and securities services.
  3. Corporate/other – this consists of other financial services such as treasury, operations and technology, global staff functions, discontinued operations and non-core assets such as consumer loans.

SWOT analysis

A SWOT analysis is a strategic tool that is used to assess the internal and external environments by evaluating the strengths, weaknesses, opportunities and threats of a company. The SWOT analysis of Citibank can be summarized as follows:

Beneficial Harmful
Internal Strengths

  • Strong financial position – in 2017, the financial institution reported $61.2 billion in revenue and $6.7 billion profit.
  • Strong brand image – Citibank has a strong image in all its regions of operations and has been recognized by different awards.
  • Large customer base – with its wide range of financial services, the company serves over 110 million customers.
  • Digitized financial services with over 15 million users
  • Leader in issuing credit cards across the globe.
Weaknesses

  • High dependence on the US and Mexico markets with the North America and Latin America reporting $25 billion in revenues.
  • Cases of fraud and money laundering allegations leading to a tainted image.
External Opportunities

  • Increased opportunities to expand in other countries especially emerging economies.
  •  Increased opportunities to expand in CSR and sustainability activities
  • Opportunity to partner with smaller retail brands to increase market share in all regions.
Threats

  • High competition from other financial institutions such as Bank of America and Standard Chartered.
  • Uncertainties as a result of Brexit and the risks it might pose in the Europe market. 
  • High risks in terms of regulations and compliance in the emerging markets

Balanced Scorecard in chart form

Critical success factors (CSF) is a tool that is used to define the critical areas that an entity must improve on in order to succeed in its mission and objectives (Yaghoubi, Siavashi & Bahmaei, 2016). The mission of Citibank is to be a trusted partner through responsibly providing financial services to enable growth and economic progress. The company does this by safeguarding assets, making payments, lending money and accessing capital markets for clients. The critical success factors for Citibank can be summarized in the following chart:

Strategy
Objectives  Measures  Targets  Initiatives 
Financial Factors Ensuring that growth in revenue and profits remain positive  Increase in revenue and profit different product segments and regions of operations Record at least 5% in revenue increase by the end of the second quarter of 2018 Increase marketing activities, expansion in underutilized markets and increasing accessibility to financial products and services
Customer Factors Increase the number of customers in all regions  More number of contracts from new and existing customers  Annual increase in number of customers by 5% Employing more staff, offering more financial products to reach different types of customers
Internal Business Processes Decrease operational costs and cycle time in providing the various financial products and services Reduced reported operational costs Annual decrease in operational costs by 5% Digitize the delivery of more financial products and services, reduce manual processes, and minimize the duplication of processes.
Learning and Growth Grow employee capabilities, core competencies and skills Increase employee skills in enabling the company to attain its mission and objectives Annual increase in employee training and development expenditure by 5% Employee training and development programs and activities, more employee orientation on different company aspects and processes such as marketing and products

A discussion of the CSFs chosen for Citicorp/Citibank: Segment:  Retail Banking

Citibank’s retail banking segment reported a net income decrease of 21% in 2017. According to the company’s 2017 financial statements, the net income decreased by 6% but increased operating expenses, high volume related expenses and investment further reduced the revenue for the retail segment. The four CSF factors were selected because of their importance in the financial institution’s success. 

  1. Financial factors

For any business, financial factors are important because every business is there to make money from the products or services that it offers. Financial factors were selected as a critical success factor for the company because financial factors such as revenue and profit measure the success of any firm. A company that is able to report positive revenue and profit growth is generally considered to be successful regardless of the percentage growth. These financial factors can affect the activities and operates of Citibank in different ways including the ability to expand and invest, the ability to pay employees and the ability to pay interests to shareholders. The retail segment of Citibank needs to evaluate its revenue and profits because a positive growth in these two items is important for the success of the company. The retail segment should particularly focus on growing its operating revenue because this is where the company could record the most income from the core business activities of offering financial products and services. If a company is not able to record positive growth in operating revenues and profits, then the business cannot be considered successful. Financial factors are also important to evaluate because they help to assess the extent at which an organization is achieving its financial goals.

  1. Customer factors 

Customer factors are critical success factors for Citibank and any other business because the success of an entity is heavily dependent on the ability to get and retain customers. Citibank should be able to understand its customers in terms of what customers want and how the company can meet these needs. Since all customers want value and quality products to keep on buying from an entity, it is necessary for organizations to go above and beyond to meet customer needs. By assessing customer factors such as the ability to retain and grow retail customers in all regions, Citibank will be able to achieve success. Growing the number of customers means that the company will sell more products and services thereby increasing its revenue and profits, which are critical elements of success. Reporting a higher number of customers every year also signifies success for the company as this implies that the company is growing in terms of size and brand popularity. For the retail segment, growing the number of customers signifies success while a reduction in the number of customers implies that the company is performing poorly. Other items to consider in customer factors is customer satisfaction in terms of meeting their needs as expected. 

  1. Internal business processes

This CSF factor was selected because each entity must be able to excel in internal business processes in order to meet customer need and achieve several other obligations. The internal business process of decreasing operational costs and the cycle time of providing financial services was chosen because in 2017, the retail segment of Citibank reported a 21% increase in operational costs. This could imply that the business segment is not efficient or the operating expenses are higher than the revenue that they bring. Internal business process are also important because they influence the outcome when it comes to providing products and services that impact customer satisfaction and the financial performance of an organization (Rababah & Bataineh, 2016). For the retail segment of Citibank, cost reduction should be the main focus as this would demonstrate the ability of the organization to meet customer needs while also attaining strategic advantage. Evaluating the internal businesses especially the operational efficiency and the cycle time of delivering products and services to customers would be critical is assessing how efficient the company is. In addition, since customers are more likely to associate with a business that is perceived to be reliable and efficient, improving on operational costs and the cycle time of providing services could help Citibank to attain success. 

  1. Learning and growth

The balance scorecard also considers learning and growth to be a critical success factor because it helps in transforming ideas and strategies into actions. It also determines the success of an organization as it increases the ability of an organization and its employees to achieve goals and remain competitive. Learning and growth factors are critical to Citibank’s retail segment’s success mainly because the bank should be able to develop its employee skills, innovation and technology use in order to compete against other firms in the industry. Through learning and growth, Citibank will be able to improve on different factors that ultimately contribute to its success in terms of attaining financial goals and retaining customers. For instance, investing in employee training and development could increase the bank’s ability to successfully sell its products and services and attain customer satisfaction in the process. More employee training and orientation activities could also enable the bank to be more equipped in delivering competitive products and services and retaining customers. In a highly dynamic and competitive global environment, the bank will need to excel in developing and maintaining long-term progress (Rababah & Bataineh, 2016). 

Evaluation of Citicorp/Citibank: Segment:  Retail Banking

Citibank’s retail banking section strives to achieve all the CSFs listed in the balanced scorecard chart in different ways.

For the financial factors, the main objective of the retail bank segment is to report a positive growth in revenue which will be measured through the increase in revenue. The target is to achieve at least 5% increase in revenue for the retail segment by the end of the second quarter. This will be achievable through increased marketing activities, expansion in underutilized markets and increasing accessibility to financial products and services. In the end of the second quarter of 2018, Citibank reported $8.3 billion in revenues compared to the $8.4 billion in the second quarter of 2017 (SEC, 2018). This decrease in revenue reported implies that Citibank is having trouble achieving the financial factor and this could have a negative impact in achieving its key success factors. The decrease in revenue might have been because the bank has focused on expanding the retail banking segment in the US and not in the underutilized markets. In addition, instead of increasing the access to its financial products and services globally, the company only focused on the US market. In the near future, the bank should consider having more retail outlets in the underutilized markets especially in Asia.

For the customer factors, the main objective is to increase the number of retail customers in all regions and this could be measured by having more number of contracts from new and existing customers. The main target for this customer factor is to increase the number of customers by 5% every year and the company could achieve these through several initiatives including employing more staff and offering more financial products to reach different types of customers. The number of customers has remained relatively the same for Citibank in 2018 with the company reporting a little over 200 million customer accounts in 2018, the same as 2017. Further, the company’s number of employees has remained the same in 2018. However, the company has rolled out new financial products and services to reach more customers and ultimately grow the number of customers for the bank. For instance, the company has added more features in its mobile banking app to meet more customer need and this would have a positive impact on customer numbers when it comes to customer retention. However, to attain success in customer factors for the retail segment, the bank will need to grow the number of customers outside the North America and Latin America Regions.

For the internal business processes, the key objective is to decrease operational costs and cycle time in providing the various financial products and services. This could be measured through reduced reported operational costs with a target of an annual decrease in operational costs by 5%. To help achieve this, the Citibank’s retail segment needs to digitize the delivery of more financial products and services, reduce manual processes, and minimize the duplication of processes. In 2017 and 2018, the company has implemented several initiatives to digitize more financial products and services including the use of Citibank mobile apps with additional features and products as well as automated processes to reduce the cycle time in providing financial products and services (Citigroup, 2018b). However, operating expenses for the retail segment in 2018 were 2% higher than those reported in 2017; according to the bank, this was mainly due to high-volume related expenses and increased investment. Since these activities are meant to benefit the bank in the long, it can be concluded that the company is achieving the internal business processes CSFs.

For learning and growth, Citibank’s retail segment’s main objective is to grow employee capabilities, core competencies and skills and this could be measured through increased employee skills in enabling the company to attain its mission and objectives. The target is to achieve an annual increase in employee training and development expenditure by 5% by engaging in employee training and development programs and activities, and more employee orientation on different company aspects and processes such as marketing and products. In 2017 and 2018, Citibank has enrolled a high number of employees to its digital training programs to enhance employee skills and ability to effectively deliver Citibank’s products and services (HR in Asia, 2018). The company also offers employee training in areas that are important for banking professionals including cyber security, fraud detection and prevention and product suitability. This shows that the company is achieving its learning and growth CSF by investing in employee training and growth. 

In conclusion, Citibank is a financial services holding company offering a wide range of products and services including retail banking. A SWOT analysis of the company shows several strengths and resources that the company can maximize, weaknesses to address, opportunities to maximize and threats to plan ahead for. An analysis of the bank’s retail segment CSFs shows that the company is achieving key success factors in internal business processes and learning and growth. However the company needs to do more in improving its financial factors and growing the number of customers globally. 

 

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