Will Howle, head of Citi’s US retail bank, discusses with Robin Arnfield how Citi’s lean branch network combined with a totally transformed mobile acquisition, service and engagement experience, a brand that is ubiquitous and the largest fee-free ATM network in the country combines to position Citi for exciting growth
“Citi’s US Retail Bank has undergone a tremendous transformation in the past few years in terms of streamlining our branch footprint, intensifying our focus on wealth management, and massively improving the client experience,” Howle tells RBI.
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“Much of this relates to the re-launch of our Citigold [wealth management] offering, clearly defining the value proposition to provide a holistic client view and a wide range of benefits and services.
“These include preferred pricing as well as access to market outlook events, wealth management seminars, and unique access to sporting, entertainment and cultural events.
Also, in late 2016 we launched a Citigold app offering combined banking, trading, and investing in one app – a first of its kind for a global bank.
“Our strategy is to drive client-led growth by delivering world-class value for each segment we serve. A relationship banking model serves our clients across the full spectrum of their needs, as they borrow, pay, save, invest, and protect. Citi isn’t a monoline.
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By GlobalData“Once you become a Citi customer, you can stay a Citi customer, as your needs evolve through your life stages and you move up through the wealth continuum.”
Segmentation strategy
“Our segments are Citigold, which serves the affluent market; Citi Priority, which serves the emerging affluent segment; and Citi Banking, which serves the mass market with a strong basic banking proposition that leverages digital. This client-led model supported by global capabilities is deployed locally and cut through locally.
“Citigold is institutional-grade execution for the retail client: provides insight, fund access, dedicated bankers, and a range of exclusive privileges and pricing. It’s a great example of how Consumer is leveraging institutional research and trading capabilities as we bring the best of Citi International Clients Group to our retail clients.
“Across our global franchise, Citigold represents 60% of our total loans, deposits, and AUMs (assets under management)- and it’s our fastest-growing segment with very attractive economics. Citigold clients generate 25 times more revenue than clients in the mass market segment, and these relationships tend to be broader and deeper, hence the quantum increase in their value.
“We’re leveraging our success in wealth management in Asia to deepen our client penetration. We launched our enhanced Citigold Wealth Management offering in the U.S. in late 2016 and we’re continuing to see very good results. We’re seeing growth in households and balances and an increased penetration of investment product.
Since 2011, the number of households served by Citigold relationship managers has expanded by over ten-fold, Howle tells RBI.
Citi retail back on the offensive
“Following a multi-year transformation, the US retail bank is back on the offensive, as we deepen growth in our six core US markets and roll out a new mobile-based National Digital Banking platform this year to serve customers coast-to-coast. We like to say it’s all about getting the right mix of bricks and clicks.
“We’re seeing strong results. Excluding mortgages, US Retail Banking revenues rose 8% in the first quarter of 2018, driven by continued growth in deposit margins, growth in investments and loans and increased commercial banking activity.
Howle adds: “As our customers increasingly engage with Citi digitally, we’ve seen digital and mobile self-service increase by 51%, while teller and call centre transactions have declined by 30%.
“Our Q1 2018 earnings statement noted that US mobile usage increased by almost 25% and digital by 25% YoY, outpacing peers. And we certainly don’t see this trend slowing down anytime soon.”
Citi digital initiatives include:
- Enabled P2P payments via Zelle to more than 86m consumers in the US;
- Delivered Quick Lock for Debit and Credit;
- Enabled ATM/Debit Card PIN reset and activation of new or replacement cards
- Enhanced Mobile Check Deposit with increased limits ($5,000) and new user experience;
- Investments: Real-time trading and brokerage account opening for Citigold;
- One-touch “Click to call” functionality to connect customers with their financial advisors;
- Cards: Dispute a charge; add an authorised user; scan to activate in the app; customized spending summaries, and
- Mortgage: Digitising mortgage experience from end-to-end.
Says Howle: “We’re building an end-to-end digital bank, one that makes our services pervasive to reach beyond the constraints of the traditional physical channels. Over time, we expect digital will become the primary channel by which we acquire, service and engage with our clients.
“Our first step is paperless, branchless, instant account-opening. It must be simple convenient and faster than ever before. We’re also introducing a compelling set of capabilities that deliver for our clients.
Other initiatives include In-app Account Opening: consumers may open a bank account entirely within the app, in minutes. New customers can begin using their account instantly — no need to wait for a debit card to arrive — and take advantage of our suite of wellness tools immediately.
Citi is also the first major US bank with a mobile app that can serve as a single hub for users’ entire financial lives, eliminating the need for additional financial tracking and budgeting apps.
This feature provides customers with a holistic view of their financial lives across their Citi accounts and other financial services providers.
Citi’s app puts customers’ data to work for them with access to accurate, meaningful insights. Customers are able to track their monthly spending versus income, make progress toward weekly spending goals, unlock opportunities to save, and illuminate insights across all their spending.
Customers asked for a more comprehensive, intuitive bill-pay capability and Howle says Citi has delivered.
“Mobile users can easily view their bills – everything from mortgage payments and student loans to gym memberships and streaming video services – not just those they pay with a Citi card. Managing bills is about more than paying them. It’s about being notified when a bill increases and providing customers with full visibility and control over recurring charges.
“What’s more, these capabilities will be available to customers – and non-customers – alike. If someone isn’t ready to open an account but wants to try account aggregation, they can create a ‘lite’ profile to test drive account aggregation and spending insights by linking external accounts (this can be done by creating a user name and password and permission external accounts
Network transformation
“We began our U.S. network transformation in 2013, and, since then, have reduced our branch footprint by nearly a third. At the same time, we’ve been upgrading and ‘smartifying’ our format, and concentrating our resources in our six core markets.
“In these markets, we have a strong position in the affluent segment, where we lead in deposits per branch. Over time, we’ve seen a significant migration from higher-cost-to-serve channels, such as tellers and call centres, to self-service offerings as we’ve invested in digital.
“This has contributed to a significant turnaround in pre-tax earnings. Excluding the mortgage business, our retail banking earnings have grown by more than four times since 2013. And we believe we’re probably gone through an acceleration of growth in the US Retail Bank, as we now have the tools to better segment and serve our client base.
“We’re investing in highly trained bankers and we are ‘hubbing’ them in dedicated wealth centres. We’re supporting the Citigold value proposition using unique digital capabilities to meet the most sophisticated needs of these clients
“We believe there is significant upside from this point by increasing penetration, where they are existing affluent clients to drive more revenue growth.”
Citi is investing in what it terms a a ‘forward-compatible infrastructure’ that does away with a one-size-fits all approach to branches and instead develops multiple sizes and formats ranging from large flagship centres incorporating every service Citi offers, to smaller digital branches.
Says Howle: “For example, last year we opened our new Bayfront Citigold Center in Miami that features new ‘workbench’ terminals that enhance side-by-side interactions with personal bankers, while providing in-branch access to Citi’s digital banking platform.
“An adjacent Citigold lounge offers a relaxing, private space to meet with Citigold Relationship Managers, Financial Advisors, Small Business Bankers, and Home Lending Officers. Videoconferencing also provides clients worldwide access to Citi.
“It’s a great example of our smart banking model, which combines the important human element with advanced digital capabilities. We have these flagship branches in New York City and we’re building one now in San Francisco.
“While our customers become increasingly digital, we recognise there remains a need for cash. That’s why we nearly doubled our fee-free ATM network last year, making it the largest nationwide with more than 60,000 locations coast-to-coast.”
“We also increased our investment in our people, launching a unique, multi-year education programme for wealth advisors in October 2015 with the Wharton School of the University of Pennsylvania.”
“We believe that branches will continue to evolve to reflect how clients bank today and will in the future. Service delivery will become almost fully digital, reducing cost and complexity while improving quality of execution as the model becomes leaner and we automate and digitise.
Fintech strategy
Howle sums up the strategy thus: “integrating the best FinTech innovations – something we call “Fintegration’”
“Pitting incumbent banks against start-up Fintechs in a winner-take-all competition is appealing to many, but not a sophisticated view of the current or future landscape.
“Fintech start-ups cannot easily build the secure and sizable infrastructure of big banks, and no single bank could consistently produce the latest digital experiences that would be better than the best emerging out of the Fintech ecosystem.
“Through some degree of controlled but open architecture, Fintegration allows us to leverage our scale, brand, and track record in providing secure, trustworthy services while leveraging the quality of customer experiences that the best in Fintech can provide.
“We’re not expecting overnight success. Building a client base outside our footprint takes time. Again, we are keeping our eye on the ball – focusing on new and deepening relationships in our core markets with the opportunity to use digital as a launch pad for growth nationwide. Our goal is not to be the biggest. But we are aiming to be the best.”
