Citigroup has unveiled
plans to roll-out a string of ‘smart banking’ branches in Japan
citing the country as a “key market”. Citi’s head of innovation,
Chris Kaye, talks to Farah Halime about the bank’s ambitions to
transform its brand into the league of the hugely successful
technology giants Apple.
Go deeper with GlobalData
Coinciding with an
encouraging set of first-quarter results, Citi, the fourth-largest
US bank by deposits, has announced plans to roll out
“state-of-the-art” retail banking branches in Japan, with the aim
of launching 35 branches within a year and up to 100 across the
globe.
The bank has already opened two
‘smart’ branches in Tokyo offering updated technology including
interactive touchscreens, video-conferencing and giving customers
the choice of using private consulting rooms for their banking
services.
The bank said the concept “reflects
Citi’s priority on customer-centric innovation” offering a
different style of retail banking for the Japanese market.
For Chris Kaye, the bank’s head of
innovation, the branches will “drive different results, better
customer experience and… be more relevant to customers in Japan
and throughout Asia. This is just the “first manifestation of [a]…
new retail experience.”
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By GlobalDataKaye told RBI: “As opposed
to thinking about channels in the context of what corner we should
put our retail experience we’re thinking about the mode of the
customer.
“So is the customer commuting, are
they shopping, are they spending leisure time with their family?
What we are designing is retail experiences that will meet those
needs based on the mode they’re in. The high street branch really
is the first exploration of that.”
Japan is considered the “lab for
the world”, according to Kaye.
“Japan is one of our largest
markets in Asia and certainly represents a significant amount of
potential for our franchise,” he added.
“[It’s] an environment where
technologies are a bit more advanced and we can really think about
how to apply those different technologies to enable different types
of client experiences.
“We thought, ‘How can we really
really understand our customers in Japan and how can we design an
entirely new customer experience where we’re moving away from this
proposition that our customers need to come to us?’
“Instead we will be with our
customers wherever they are, whenever they need to be with us.”
Kaye said the new
branches were “about making a commitment when a customer begins an
experience in a particular branch that we’ll know exactly where
they are as they move on to a different touch point. It’ll be
smart; it’ll be very easy for them”.
The branches will feature the
following technology and services:
- Interactive media wall: a large
interactive, touch panel style multimedia wall, located within the
branch, displaying the latest financial data, domestic and foreign
news; - Service browser: a large
touchscreen device that helps customers more simply obtain
information on Citi’s products, services and analysts’ report
summaries with the intention of negating the need for printed
materials and fulfil the bank’s ‘eco-branch’ objectives; - Work bench: by operating touch
panel screens, customers can open a bank account, apply for a
credit card and complete various transactional services. It allows
customers to complete their daily banking needs on their own,
assisted by branch staff, or through the videoconferencing
service; - 360 Station: unites the
information and touch functionality offered by the service browser
with the functionality of the Citi ATM, and; - Consulting rooms: fully private
rooms where the functionality of the workbench can be used in a
personal space. Customers can talk directly with staff or receive
consultation through the videoconferencing system.
Kaye also highlighted staffing as a
key issue.
He said: “They are not so much
bankers but enablers that help customers seek financial solutions
as opposed to working through all of the paper and associated
headaches.”
The bank would not disclose how
successful the ‘smart’ branches had been so far but Kaye said Citi
was “encouraged by early results.” While the launch was still in
the early stages, he said that Citi was planning to refine the
smart banking model and roll out further branches across Asia.
“We have an expectation that these
branches will be significantly more productive than our average
branch productivity and early results are favourable,” Kaye
added.
In fact, Kaye said the smart
banking concept has been used “beyond the borders of Japan already”
but was cautious on disclosing which countries saying that Japan
remained a “lab market” for testing the model.
But Citi’s caution does not detract
from its ambitions.
Kaye likened the concept behind the
‘smart’ branches to Apple’s brand strength.
“By analogy, Apple has created an
ecosystem of experiences and capabilities that relate to each other
seamlessly. It doesn’t matter where you enter this ecosystem you
will have a customer experience on that platform,” he said.
Kaye said Citi wanted to
re-engineer the entire banking process to create a “very, very rich
and seamless experience for customers to interact with us”.
“We will be defining entirely new
channels of banking,” he said.
“As we look at the relationship
between the physical experience and the digital experience what we
are doing is converging those experiences together so that
customers can have a very similar interaction with Citi whatever
channel they engage with.”
The bank is already using the same
design firm that worked with Apple.
“We have approached this very much
from a partner model. We have taken partners like AidInc – a really
globally known experienced design firm that have worked with
Apple,” he said.
“All of the work we do is informed
by our strategy and what we are developing here is a
differentiator. We think this is a powerful model which does not
rely on traditional means of distribution and one that will allow
us to achieve scale in markets in a completely different way.”
Citi’s CEO Vikram Pandit recently
talked about the bank targeting emerging markets for profit
growth.
For Kaye, this has “certainly” had
an impact on the growth strategy in Japan.
“We are tracking the productivity,
the types of interaction – we think this will have a positive
impact on our brand in Japan and globally. We think we will
continue to be a leader there,” he said.
“Citi continues to invest in
building new customer experiences in the market place.
“So we are creating value and the
way we are doing it is partnering by bringing the best thinking in
from the retail sector – [that] is how you create a meaningful and
engaging customer experience.”
A chequered few
years
Citi’s ambitious
investment plans for Japan come after a chequered few years in the
country for the US group. At the start of 2007, it became the first
high-profile casualty of the Japanese government’s clampdown on
consumer debt, taking a $370m hit in the fourth quarter of 2006. It
responded by closing 270 branches and 100 automated loan
machines.
In July 2009, Citi suffered a
one-month suspension of all retail sales activities at its
25-strong-branch network (augmented by six sub-branches), including
advertising and marketing activity, as a result of a failure to
comply with local regulations relating to suspicious transactions,
including money laundering (see RBI
615).
The ban, imposed by the country’s
Financial Services Agency, was the bank’s second such suspension in
Japan in the past six years.
To add to the bank’s embarrassment,
it was also ordered to revamp its corporate governance structure
and internal controls.
Citi’s acquisition of Japan’s
third-largest broker, Nikko Cordial, also represented a major
reversal to its regional ambitions. In addition to performing a
major U-turn by selling Nikko Cordial, Citi also disposed of its
asset management unit in the country.
The bank’s current Japanese
distribution network also comprises two call centres, online
platform and 103 ATMs.
While regulatory breaches curtailed
Citi’s private banking ambitions in Japan, Citi is fighting back
with the launch of CitiGold Private Client, aimed at high net worth
individuals (HNW) with assets under management of between $1m and
$10m.
Launched in March jointly in
Singapore and Hong Kong, CitiGold Private Client, aims to cater for
both personal and business wealth and provides a stepping stone to
the ultra HNW service provided by Citi Private Bank.
CitiGold private client services will be rolled-out across the
region in phases. The service will be introduced in India and
Taiwan in the second half of the year, followed by Korea, Japan,
Malaysia, Indonesia and the Philippines.
