Brief Summary of the Issues Faced - A Case Study of Citibank

4 pages
1069 words
Carnegie Mellon University
Type of paper: 
Case study
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The article offers comprehensive information on the aftermath of the severe financial crisis and the economic depression, in particular on the financial institution. With a specific emphasis, it provides the description of the manner in which the Citibank and other major American banks suffered losses in billions of dollars. However, the Citibank reshaped its e-business considerably after the financial crisis that occurred in 2008. In this way, it focused on leveraging its geographical reach, rolling out the global initiatives with the aim of maintaining its leadership in the treasury and trade services. This move helped the company become more customers centric. The research and development emerged as one of the major areas that were subjected to restructuring. Besides, the restructuring of its marketing strategies was aimed at assisting the customers instead of selling the products. As observed in the article, Citis execution was fast-paced, but the landscape for the treasury and trade services was substantially transforming after this financial crisis. As such, the multi-banking scheme became an obligation and the new solution marketed by the SWIFT allowed to the multi-bank on the internet at low cost and with greater efficiency than the previous solutions. Despite the fact that the adoption was slow, the change in the competitive nature demonstrated tremendous significance. Ideally, banks data and information were now visible and subject to manipulation through internet portal of any other bank.

Over the time, the internet portals continued to evolve providing new features and functionalities at the product level. Regarding this, Citi updated its CitiDirect BE as well as the Treasury Vision platforms to provide what the market needed or asked for. Unfortunately, its relationship with the corporate at the technology level was not evolving at the same pace. Notably, a considerable inefficiency existed regarding the exchanges of the bank and corporation data, thereby making the numerous treasury activities labor intensive. It meant that the business emerged to prefer multi-banking programs after the financial crisis and was demanding automated integration of bank data into their ERPs. For the Citibank, the electronic business was evolving, making the internet banking portals to become multitasking portals as done by the proprietary bank-corporate EDI links such as CitiConnect. It is, however, important to recognize that the cloud computing promised the definitive technological solutions for the bank-corporate integrate model. As demonstrated in the case, the ERP vendor SAP was the first to experiment with a private cloud model and allow direct straight through processing of each financial transaction sent from the ERP directly to bank middleware. Fascinatingly, the Citi was the first bank to subscribe to this particular project and was in turn followed by its competitors. It was, therefore, concrete proof that the digitalization of the banks was reaching the next level and this assured significant effects on the banking business model.

Recommendations Suggested

Regarding the challenges that Citibank was facing, various suggestions were offered. The recommendations revolved around shifting new markets and creating new challenges for the bank-corporate relationship. As a multinational corporation, the bank was required to move away from the short and concentrated supply chains in developed countries and chose to atomize their production-based among other processes. For the Citibank, shifting to the new capabilities and partners in the developing world and subjecting production close to the end market to compensate for the less-developed infrastructure was a significant move. The Citi innovation blending technology and product development with the direct customer involvement was the important recommendation and move adopted. Fundamentally, the Citi drove innovation in the bank-corporate space by working closely with the clients to understand and monitor their needs. The focus of embracing the change entailed leveraging the power of social media, and information analytic in the digital age. Besides, it was aimed at facilitating the continuous mobility, increasing the security and preventing the fraud and finally, to enhance the introduction of the new forms of digital goods and services.

Transformation of the Research and Development became another significant recommendation to the company. Specifically, Citi focused on making its marketing role more customer-oriented to complement the research and development. Fascinatingly, the company often distinguished itself from the competition through providing a customizable product and not an off the shelf technique. In combination with the innovation labs, the banks marketing efforts emerged to be of substantial help to the clients through providing them with the opportunities to analyze the conditions for formulating a specific approach to finding the right solution. As a result of these two recommendations, the R&D at the innovation labs and sale team would develop applications fitted to market requests and marketing function would interact with every individual client required for customization.

The rationalization of the Information Technology infrastructure was recommended to help in the evolution of the corporate-bank integration model. Notably, the bank was operating legacy systems and the structure of over 70 data centers that integrated technology from acquisitions, disparate systems, and the redundant centers which were all characterized by the low available utilization rate. Undeniably, the company was on a moderate scheme running its thousands of servers at five capacities, thereby leading to the unnecessary operational costs as well as the complexity. The bank, therefore, focused on the consolidation its data centers worldwide. This situation was later followed by a sharp reduction of its servers 70 centers to 20 centers, constituting to a decrease by nearly 75 percent. A closer look at this situation would reveal that the consolidation of servers was a direct operational decision which was aimed at implementing a global operational model, which was a fundamental pillar of the Citi digital strategy as the management considered this initiative as a necessity to sustain its digital strategy. The Citi conducted a complete review of all its existing data centers and benchmarked its current situation to the banks various business lines of actual and the future requirements.

Finally, the cloud-computing technologies further formed an integral component of the recommendations offered by the Citibank. Notably, this technology made the EDI between ERP software and bank middleware possible at the costs that were marginally greater than those of the internet platforms. The second electronic business was, therefore, the beginning for the banks where the digitalization seemed the dominant force in a reshaping the business model of various financial institutions including the Citibank. Through this transformation particularly from multi-banking internet platform model, the clients were allowed to manage the transactions with the other bank through the proprietary internet-banking platforms.


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