A Study on Citibank (Part 2)

The begining part of the assignment in.. A Study on Citibank (Part 1)

4.0 Strategies Analysis

4.1 Online Banking Strategy

Laudon and Traver (2008) point out that, more and more people and businesses will involve in the internet in their daily activities, and the e-commerce will continually growth in the future. The trend of technology is not allows Citibank to depend on only branches to their daily business transaction activities. As the result, Citibank have involved in e-commerce in the very early stages to serve this growing market.

As mention in the SWOT analysis (weaknesses), Citibank have not more than ten branches in Malaysia. In order to compete in this competitive banking industry, Citibank has introduced their own e-commerce and m-commerce in their daily banking activities to their customers. It has been call as “Online Banking Services”.

The purpose of this strategy is to overcome the problem of the limited branches they have in Malaysia. Through the online banking services, Citibank has able to cut off the distance problem of their customers facing in daily banking activities.

Besides that, this Online Banking Services able to Citibank in cost saving. This strategy is technology based but not human capital based of operation. The cost to open difference geographical problem have been solve, and less branches are needs.

Other than that, impossible to Citibank not to introduce the Online Banking Services, because the online banking culture have been apply by other financial institution, and the culture might growth in among the generation X and generation Y.

The Citibank Online Banking Services have providing variety of choice to their customers to target the online banking culture to replace the limited number of branches in Malaysia. The variety of services has been providing and it will be show as below:

Mobile Prepaid Reload

Citibank (2009) note that, their customer able to reload their mobile prepaid instantly through Citibank Online Banking Services.

Online banking

Citibank (2009) mention that, banking activities able to done by online and it is Awarded Best Internet Bank in Malaysia by Global Finance.

Online Bill Payment

Citibank (2009) state that, Citibank customer can pay their bill through online, and this service is free for their customer.

Citi Mobile Bill Payment

Citibank (2009) show that, Citibank customer able to pay bill by using their hand phone.

Other than that, Citibank Online Banking Services also have online credit card services, CitiGold Online, Citibank Alerting Services.

Through this services Citibank have won the award Best Internet Bank in Malaysia. This proves that the success of this strategy has attract a lot customers to their business. The used of Online Banking Services have also promo the convenience to their customers.

4.2 Islamic Banking Strategy (Islamic Principles for Banking Activities)

Citibank (2009) has mention that their customers can have their banking activities in the Islamic principles. This not only able attracts more customer but Citibank are show that they understand their customer need in the daily banking activities.  This principle have apply in Citbank branch in Malaysia.

“What are the reasons behind the recent growth in Islamic finance? One is the strong demand from a large number of immigrant and nonimmigrant Muslims for Sharia-compliant financial services and transactions.” (Qorchi, 2005)

In order to compete in the rising of the demand of Islamic Banking, Citibank has introduced the Islamic Baking to their customers. As mention in the SWOT analysis the demand has rising rapidly and now are applying by more than 75 countries as Qorchi say in 2005. After for year, it is impossible to a banking institution do not offer to this segment of market demand.

“Islamic financial products are aimed at investors who want to comply with the Islamic laws

(Sharia) that govern a Muslim’s daily life.” (Qorchi, 2005)

Qorchi (2005) have explain that Islamic financial product are offer to investor who want their banking activities are based on Islamic Laws (Sharia) in their customers daily life. In order to apply these principle, Citibank (2009) has mention that their Islamic Banking services are show as below:

Citibank Guard Savings Account-i

Citibank (2009) note that, this saving account is in the line with Syariah principle of Wakalah.

Citibank Home Partner-i

Citibank (2009) mention that, this loan of home plan to follow the concept of Musharakah Mutanaqisah.

Citibank Checking Account-i

Citibank (2009) explain that, this checking account is based on the principle of Al-Wadiah Yad Dhamanah

Citibank Time Deposit-i

Citibank (2009) show that, this deposit is in the line with Al-Mudharabah concept.

Citibank Unit Trust Account-

Citibank (2009) offer that, the investment that are in line with Syariah principle.

The Islamic Banking Strategies has become an important service for Citibank services that able to fulfill the need of their customers. Besides that, Citibank able to promo it goodwill, because able to apply the ethical concept that they had directly apply through the Islamic concept.

4.3 Alliance Strategy

Thompson, Strickland III, and Gamble (2008) said that, Cross-border alliances have proved it success and popular for companies to enter the foreign countries market. The alliance strategies apply by Citibank is a type of Cross-border alliances strategic, which Citibank (as multinational company) alliance with local companies to attract more customers in this market (Malaysia).

“Cross-border alliances enable a growth-minded company to widen its geographic coverage and strengthen its competitiveness in foreign markets while, at the same time, offering flexibility and allowing a company to retain some degree of autonomy and operating control.” (Thompson, Strickland III, and Gamble, 2008, p.217)

As mention in the SWOT analysis (threats) the banking industry are very competitive, and it cannot be stand alone in the market. In order to compete in this competitive market, Citibank have launched their strategies of alliance with other companies in Malaysia. By this strategies Citibank try to expand their market share in Malaysia.

However, Citibank are not the only one alliances with local companies in Malaysia. This strategies has been use widely by Citibank competitor as well to compete in the financial market in Malaysia.

Besides that, in the SWOT analysis (weaknesses) show that Citibank have not more than ten branches in Malaysia. To compete with this competitive market are not easy. The alliances strategies that Citibank using is also try to expand its geographical coverage to increase their market shave.

Citibank have actively applied this alliance strategic in Malaysia. There are a lot of Citibank services are involve the alliance with local companies. In the credit card services Citibank have alliances with four companies in Malaysia. For example, Giant-Citibank Credit card and AirAsia-Citibank Credit Card. Besides that, Citibank also have allow customers to collect the Citi rewards point in the specific outlet of other companies, for example, Cathay, SenQ, Senheng, and the Carat Club.

4.4 Core Services and Sub-services Diversification Strategy

Citibank is applying this diversification strategy into their core services and sub-services. It means Citibank are introduce a lot of choice of services into a similar services that they offers (e.g. there are total 11 types of credit cards are introduced to customers although the core function of credit card is same).  In this strategy, discussion will base on the core product (credit cards services, deposit services, and loan services) and sub-product (investment services, insurance services, and financial management services). It will show as below:

Credit Cards

Citibank (2009) offers different type of credit cards to fulfil the demands of customer. Customer may choose the credits card based on their need and they like. There are 11 types of credits card that will be mentions in the credit cards strategy.

Loans

Citibank (2009) offers customer in terms of Personal, Student, Home, a large bouquet of Mortgage, and Real Estate loans. These loans are greater flexibility, lower interest and more saving.

By Citibank (2009), there are several type of loans are offered to the customer. There have 10 types of loans and they have their own advantages. The loans will explain in this part is Citibank Homecredit Loan. Citibank (2009) offered these loans to attract more to get loan from Citibank. This loan has many advantages. They are includes this loan is single integrated account, pay-as-you-wish, payment and withdrawal flexibility, no maintenance fee, no commitment fee and access to cash anytime.

Another loan is Citibank Business Power Loanthat is for business loan. By these loans, customer may have flexible credit line, daily interest calculation, integrated all-in-one account for more interest savings & flexibility, and checkbook facility.

Deposits

Citibank (2009) will maximize the returns of money with high interest fixed deposits. The deposit may help customer earn more money. There have 8 type of deposit. In the Basic Checking Account, Citibank/Citigold Debit & ATM card to withdraw cash or make payments worldwide, one monthly statement for all transaction, and online account inquiries and banking transactions.

Another is Time Deposit, that is earn interest on interest monthly, flexibility for partial withdrawals before maturity date, balance continues to earn high interest, and instant Ringgit for Ringgit overdraft facility.

Investment

Citibank (2009) is experienced in terms of asset management and foreign investment management. Citibank (2009) may offered customer with the quality investment product and do research on local and global financial market to help customer in investment guideline.

The example of investment is Market Linked Investment that Citibank will offers potentially higher returns than fixed deposits 100% capital protection at maturity. They also customised solution to match investor’s needs and requirements and last offers potential reward and risk control that may protects against inflation.

Another is Market Watchthat is access to renown research with in-house view from Citigroup Investment Research and provides latest fund manager’ view of the financial market and their investment strategy.

Insurance

Citibank (2009) offers customer an insurance to protect customer of their investment so that they will be well taken care of. The insurance that Citibank offers includes Home Insurance, Credit Card Insurance, Phone and Travel, Bancassurance and Share Financing Protection Plan.

Example of insurance is Legacy Plan, this type of insurance will take care of customer family’s financial security for generations to come with Legacy Plan which benefits 3 generations of your family.

Another is Phone & Travel Insurance that is a convenient travel insurance that may lets customer travel by land, sea, air and rail in total ease.

Financial Management

Citibank (2009) provides services that may help customer plan their finances, manage their wealth and secure their future with expert assistance.

Example of these services is CitiBusiness that integrated banking and business solutions tailored for the Small and Medium-sized Enterprise (SME). The network of privileges to benefit and help you save costs and yield better returns.

Another is Citigold Wealth Management, that is dedicated Citigold Wealth Management Team for personalised services, access to world-class research from Smith Barney Citigroup, Ongoing portfolio review to help adjust customer wealth management plan.

4.5 New Branch Strategic

Citibank also have new branch strategy to expand their market share in Malaysia. Currently, Citibank Malaysia has sevenbanking locations across Malaysiathat is as below with three branches located in the capital city of Kuala Lumpur, Penang and Johor Bahru as well as in Puchong, Damansara Perdana, Klang and Bukit Tengah:

Citibank Kuala Lumpur Branch, Menara Citibank, 165 Jalan Ampang, Kuala Lumpur.

Citibank Penang Branch, 42, Jalan Sultan Ahmad Shah, Georgetown, Penang.

Citibank Johor Bahru Branch, City Plaza 21 Jalan Tebrau Johor Bahru.

Citibank Klang Branch, G-101, CENTRO, 8 Jalan Batu Tiga Lama, Klang, 41300 Selangor.

Citibank Bukit TengahBranch, 1819-B, Jalan Perusahaan, 13600 Seberang Perai, Penang (at Auto-City)

Citibank Damansara Perdana Branch, Lot C108, Centre Wing, Metropolitan Square, Jalan PJU 8/1, Bandar Damansara Perdana, 47820, Petaling Jaya, Selangor.

Citibank PuchongBranch, 26, Jalan Puteri 1/1, Bandar Puteri, 47100 Puchong, Selangor.

Refer to the SWOT analysis (threat from competitor) if Citibank are continually not to open new branch to gain more market share in Malaysia, it will have difficulty to compete with other financial institution Malaysia. As Citibank chief executive officer Sanjeev Nanavati said that, “Citibank Bhd will set up four new conventional branches early next year and submit a formal application for the setting up of an Islamic subsidiary as part of its strategy to widen its presence here.”

New branch strategies actually are the skills of expanding the market share of the Citibank group. It may increase the potential consumer in order to use their services in surrounding the branch location. It also be one competitive skill comparing with another competitor. Last, it strategy may be one important factor to determine Citibank’s success.

4.6 Promotion Strategic

Hawkins and Mothersbaugh (2007) present that, in the perspective of consumer behaviour study, promotion not only able to attract attention of potential customer but also as a marketing tools to continually remind the exist of a certain brand of product or services in the market.

In order to continually attract attention of consumer, Citibank have launch their promotion activities from time to time. There are many promotion strategies that use by Citibank.

Currently, Citibank issues more than 15 promotions in their company. By the first is Deposit with Citigold for greater rewardsthat customer may enjoy up to 3.20% p.a and win a complimentary Samsung Camcorder.

In Credit Card, Citibank also provides many promotions at there. They have Enjoy 0% interest payment with Citibank Easy Pay as benefits own a HP notebook from as low as RM63 × 24 months and other additional benefits. Shop and ship from the US with GlobeShopper is one promotion that is free registration and shop from over 300,000 online stores. Next is Giant-Citibank Promotion that is free HP Mini Notebook for every credited for every 25th approved applicant, Apply & Buy that customer can get LG 32” LCD TV at only Rm1,199. A new card for you, a new look for your car is based on customer can enjoy 2 FREE car wax vouchers worth RM256, upon card approval. AirAsia-Citibank Credit Card Exclusive is special for customer for purpose not need to pay for airport tax too with AirAsia-Citibank credit card. Citibank Gourmet Pleasures-A wealth of food to choose from! is enjoy special discounts and offers on a wide variety of mounth-watering cuisine. Citibank Flexi Payment Plan is have ability to convert purchase RM500 and above for pay from as little as RM18 per month. Citibank Alerting Service is stay informed on your account information via SMS and/or Email alerts. World of Citibank Platinum (Oct – December 2009) that is enjoy world-class music at Dewan Filharmonik PETRONAS with luxury box seats in the Citibank Platinum Suite. Citi Home Shopping enjoy up to 12 Months 0% Interest Easy Pay. Platinum credit card – Plaza Premium Lounge with enjoy Complimentary Lounge Access at Plaza Premium Lounge in KLIA with Citibank Platinum Credit Card. Easy Ways To Pay Your DIGI Postpaid Bill! that is sign up for Autopay & get RM5 monthly rebate. Citibank World Privileges may enjoy special privileges and discounts from Citibank World Privileges.

The next is loans promotion that has in Citibank. “Get a free flying lesson and more with Citibank Home Loans” is guaranteed gifts free flying lesson, free local & international vacations, and more. Personal Loan – Citibank Installment Loan is get up to RM120, 000 with no guarantor and no collateral.

Deposits also be one promotions at Citibank. Earn 8X Citi Rewards points at any petrol station is can get more rewards with your Citibank/Citigold Debit & ATM Card.

Citibank Online part also got Citibank Electronic Statement be a promotions that is access your past 12 month’ statement online anytime, anywhere for free.

4.7 Credit Card Strategy

The Citibank Credit Card services are offered without charging any extra amount of money to subscribers. All the services that are provided by the Citibank Credit Card services are actually designed to make the use of the credit card easier. The Citibank Credit Card service also helps one to get access to their credit card account all the times.

Citibank provides the credit card service to differentiate the market of customer. For the large amount of customer, Citibank current have been provide 11 type of Credit Card that can be choose to customer. Customer can choose Credit Card based on various choices.

They have a Credit Card based on consumer spending type such as Shell Citibank Credit Card and AirAsia- Citibank Credit Card. This type of Credit Card may play in part of rebate money of the customer spending in their specific consumption. For instance, if customer who is applying the Shell Citibank Credit Card, they may get up to 5% rebate on Shell fuel purchases.

Besides that, Citibank also provides the Credit Card based on personal benefits. Type of this Credit Card is includes Citibank Gold Credit Card and Citibank Platinum Credit Card. For example of Citibank Platinum Credit Card, they have provides the Global Purchase Protection that is eligible purchases are automatically protected item of stolen, lost or damaged and can reimbursed of 50% of the amount relates for 30 days.

The business type of Credit Card also provide to the customer such as Citibank CitiBusiness Credit Card which is offered higher business-size credit line up to RM250, 000 and another business benefits. That is good news for the businessman who wants to grow up their business.

In summary, Citibank Credit Card service has shown that they are provides the services to the all levels of customer who are want to get rebate of their consumptions or additional benefits. This strategy can get support from the customer and increase their loyal against Citibank.

5.0 Recommendation

5.1 New Branch in Difference Geographic Area in Malaysia

Based on the SWOT analysis (weakenesses- less branches in Malaysia), we are recommend that Citibank should increase their branches in Malaysia. Open a new branch will required a lot of resources and it may burden the company. Select of location will play an important role in limited the expenses and should able to easy to access by customers.

We success that, Citibank should open new branch in each major town in Malaysia, in order serve and gain more market share in Malaysia. Too many branches that open focus in only one location will become a waste of resources. Citibank have open four branch that focus on the Selangor and it might become a waste of resources for them, because they are forgo the other major city in Malaysia.

5.2 Expanding the Islamic Banking Concept

Major citizen in Malaysia are muslim and the market need the Islamic Banking services. It will be more suitable to expand their business in Islamic Banking Concept compare to the normal concept. Citibank should not forgo this important market. The Islamic Banking concept also follows by other competitors. Citibank have offer the Islamic Banking concept but it should create more awareness to encourage more customers to join their services.

Besides that, the uses of Islamic Banking concept in financial institution will also promo the ethical value that Citibank will be follows. This because any unethical and prohibit activities in Islamic concept are not allow to involve in the banking activities. If Citibank are follow the concept, they will able to promo their goodwill in Malaysia.

5.3 More Automatic Teller Machines Place in Public Places

It is same in the SWOT analysis (opportunities), Citibank should place more Autometic Teller Machines to serve their customers.For example, CitiBank can co-corporate with 7-11 Deposit-Taking ATMs which will convenience to customers to deposit the check at anytime in 7-11 stores. 7-11 Stores is one of the biggest franchising convenience market stores, so, this will increase the value for customer by providing addition services.

Besides that, Citibank also should place its Autometic Teller Machines in major shopping mall. Difficult to its customer to access to Autometic Teller Machines will not promo the encourage factor to their potential to join Citibank services. Potential customer more likely to visit nearly financial institution in their town.

5.4 Corporate Social Responsibility

We suggest that Citibank should active in Cause Related Marketing activities to contribute some social responsibility to the social.

Corporate Social Responsibility is which the company get involve in non-profit activities and promo ethical value to the social. This will indirectly increase their goodwill and gain better perspective from consumers. Other than that, it will also able to give motivate to employees, let its employees feel that what they work not only contribute to the Citibank but also have some contribute to the social as well.

6.0 Conclusion

As overall conclusion, Citibank is one of the multinational companies that successful in online based financial institution that operate in Malaysia. Citibank able to understand the culture of local citizen (promo Islamic Banking Services), able to gain their market share by solved the geographical problem (online banking services), able to cost cutting by promo the online banking culture to their customer, and able to compete with the local financial institution. Although it is a foreign company but Citibank is a good model to local financial institution to learn their strategies to increase their competitive capability to compete in the global market.

Reference

Laudon. K.C. and Traver, C.G. 2008. E-commerce Business Technology Society 2008; Fourth

Edition. United States of America. Pearson Education International.

Thmpson, A.A., Strickland, A.J., and Gamble, J.E. (2010). Crafting and Executing

Strategy: Seventeenth Edition. America: McGraw-Hill Irwin.

Piercy, N.F., & Cravens, D.W. (2009). Strategic Marketing; Ninth Edition. Singapore: McGraw

Hill.

Hawkins, D.I., & Mothersbaugh, D.L. (2007). Consumer Behavior; Building Marketing Strategy

Eleventh Edition. United States: McGraw-Hill Irwin.

Citibank (2009). Retrieve September 23, 2009, from http://www.citibank.com.my

Qorchi, M.E. (2005). Islamic Finance Gears Up. Retrieve September 25, 2009, from

http://www.ibtra.com/pdf/Islamic Finance Gears Up.pdf

It’s important to understand the details of your credit card.
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