Citigroup has launched a new retail banking and brokerage offering.
Citigroup has launched its first standalone service for online trading, as well as revamping its online banking offering. The move is part of a major repositioning of Citigroup’s online offerings, initiated six months ago with the reorganization of its e-Citi unit and the move of all Internet activities to its consumer banking group. With total eBanking IT expenditure by US companies estimated at $3.2 billion in 2000 and predicted to grow to $8.5 billion by the year 2005, most players are rethinking their eBanking and overall online strategy. While the web provides a wealth of opportunity, it can become a runaway cost center if a company’s web strategy does not complement its overall strategic goals and competencies.
Cititrade, Citigroup’s new standalone online brokerage operation, aims to challenge the online brokerage industry’s big guns, targeting do-it-yourself investors. The company’s strategy for the new service is to price trades comparably to firms like Charles Schwab (at $29.95), to provide access to research generated by its Salomon Smith Barney unit, and to offer a simplified tax preparation service with gain/loss reporting. The firm believes it can grow customer numbers and assets at the lower, traditionally less profitable end of the market, despite the existence of dozens of established online competitors. Indeed, Citigroup’s brand loyalty should help it overcome the hurdles of being a late entrant.
The revamped banking offering, Citibank Online, will be prominently featured on AOL and has links to MyCiti (its account aggregation site) and to Cititrade, as well as providing a range of planning tools with educational content, improved navigation, and added quotes and research capabilities. In effect, Citibank has turned its online site into a financial services portal to increase the number of products held by customers, improve retention rates, and cut servicing costs.
A customer-centric value-added approach through all-encompassing, yet tailored, portal sites is a winning business model in this converging industry. As such, Citigroup has taken definite steps to strengthen its position over the Internet and ensure that its proposition is viable longer-term.
