Citibank%20Online

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Citibank Online

• Living on the eBusiness Frontier - Part II
• Annual Sponsors Conference
• Center for eBusiness_at_MIT
• Mark Parsells, President and COO,
• Citibank Online
• 1/17/2001

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Citibank Online Vision - Domestic

• The Citibank Online vision is to be the leading
  one stop shopper financial portal on the
  internet as measured by number of customers,
  product revenue, retention rates of multichannel
  customers, Citigroup cross-sell revenue and
  industry rankings.

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Citibank Online Vision - International

• Citibank Online role is to export our
  best-in-class financial services portal and to
  strive to be the leader in each of the countries
  in which we do business using the same
  measurements as the domestic business.

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Focus of todays presentation - Domestic

• Citigroup has local language banking sites in 23
  countries today and will be in more than 30
  countries by end of 2001.
• Recently launched Citiworld financial services
  portal in Japan.
• Focus today will be the domestic business.

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Internet Banking - Situation Analysis 1998

• 1998 industry players were rushing to launch
  internet only offerings
• Pure play banks had huge valuations enabling
  significant advertising spending, fee waivers and
  high interest yields on deposits
• Traditional banks like Bank One
  (WingspanBank.com) and Citi (Citi f/I) didnt
  want to be left behind

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What Online Customers Wanted in 1998
Summary of 1998 Research of on-line users

• Important
• Price (no fees, high rates)
• Internet company that gets it
• Dont make me deal with a human
• Performance, i.e., fast response time online
• Single log-on for all accounts

• Not Important
• Value based pricing
• Brand I trust
• Security
• Multichannel access
• Customer service

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Gomez Rankings in 1998

• Top five were pure plays
• Citibanks Direct Access was 9
• Citi f/i was 17

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Things Changed - Pure Plays Didnt Have a
Sustainable Position

• Customers Changed - New on-line customers were
  more like the general population - not early
  adopters
• Perceptions Changed - Hype wasnt consistent with
  reality, pure plays had very little market share
  relative to their media status - the facts
  started becoming important
• Investors Changed - As P/Es became more important
  than P/Rs, valuations plummeted

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Customers Changed! What Online Customers Wanted
in 1999 and 2000
Summary of 1999 2000 Research of on-line users

• NOT (As)Important
• Price (no fees, high rates)
• Internet company that gets it
• Do make me deal with a human
• Performance, i.e., fast performance online
• Single log-on for all accounts

• Not Important!!!!!!!!
• Value based pricing
• Brand I trust
• Security
• Multichannel access
• Customer service
• Performance and single sign-on still important

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Most Customers Prefer a Choice
Human-assisted
Electronic
Digital-preferred
Human holdouts
Malleable middle
Old dogs, new tricks
Teller-tied
0
11.8
7.8
Average number of monthly transactions
Source Forrester
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Perceptions Changed! - The Facts of The Online
Banking Marketplace

• Although net banks received a lot of air time
  they only account for 3 of the online banking
  customer.
• The real winners have been the bricks and
  clicks players like Citibank.

Source Recent press releases, trade publications
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Perceptions Changed! Actual Customers

• BCs Banks Online HHs
• Bank of America 3.0mm
• Wells Fargo 2.5mm
• Citibank 2.2mm
• First Union 2.1mm
• Chase .75mm

• Pure Play Banks Online HHs
• Security First 0.3mm
• Wingspan 0.2mm
• NetBank 0.2mm

Source Forrester
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Investors Changed! Show me the Money!

• NASDAQ plunged losing 50 of its value
• VC money all but dried up
• is now important important
• Investors not willing to fund large advertising
  campaigns or money losing products

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Whats the Result? The Power has Shifted

• Pure Plays are starting to look more like
  Traditional players
• Etrade bank has lowered its Money Market
  interest by 1.25 in the last 30 days and will
  likely go lower
• WingspanBank has implemented a wide array of
  account fees and has slashed what they pay for
  ATM rebates
• Juniper is trying to establish a branch presence
  through Mail Boxes Etc.

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Convergence of Business Models Appears to Favor
Traditional Banks

• Trusted Brands - financially secure
• High Quality Customer Service
• Established Multichannel presence (branches with
  trained, bonded employees)
• Rich in Product and Feature offerings

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Citibank Onlines Strategy

• Take the best features of Citi f/I and Direct
  Access and converge them into one, stronger
  Bricks and Clicks offering
• Position site as value oriented, feature rich
  one stop shop that makes people lives easier
• Leverage Citibanks brand reputation
• Emphasize multichannel offering
• Focus on security of funds and information

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Tactics - Created and launched Citibank Online in
90 days

• Used accelerator method to launch Citibank
  Online
• Daily mgmt team issue resolution meeting
• Weekly Vice Chairman level issue resolution
  meetings (No dog and pony presentations)
• Accelerated staff processes for HR, Legal and
  expense approvals
• Hard work/little sleep

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Result Citibank Online Launched on 10/1
Citibank is a brand I trust Its easy to get
started Lets me control my finances Good
value for my money Always on the leading edge
of technology
Combine the benefits of each channel
Citibank Online 10/01/00
IVR, ATM, etc. (Other Touchpoints)
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Citibank Online Sign-On Page
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Citibank Online Customer Home Page
Front end is Broadvision portal formerly used by
Citi f/I -Customizable -Personalization capable -
Content and Feature Rich
Back end is Direct Access -Reliable Transaction
engine - Free Bill Pay -Single sign-on
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Key Customer Value Elements

• Citibank is a brand I trust
• Rated 1
• Reinforced by Online Fraud Guarantee through
  SafeWeb (Travelers)
• Easy to get started with Citibank Online
• No separate enrollment - Only CIN and PIN
• Single sign-on to all accounts
• Citibank Online lets me control my finances
• Broad array of linked products and financial
  transactions
• 24 x 7 Service
• Customized home page
• 7-year statement history
• Multiple access/service points (Financial Center,
  IVR, ATM, Phone, Internet)
• Citibank Online provides me with good value for
  my money
• Free online Bill Payment - no conditions
• Better incentives for accounts opened online
• Rewards clients for having higher balances
  (relationship pricing including credit)
• Financial tools, mutual fund and stock screening,
  portfolio tracker
• Citibank is always on the leading edge of
  technology
• Wireless alerts/access, bill presentment, person
  to person payments, account aggregation

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Key Marketing Initiatives -Yield results

• E-Mail programs for acquisition and cross-sell,
  particularly to70mm credit card customers
• AOL Permanent placement in PFC
• Other On-Line Partner deals (e.g., MSN, etc.)
• On-site smart deals
• Pay for placement on search engines
• Direct mail
• On line acquisition costs range from 0.40 to 54
  per customer
• Trade Shows (e.g. Comdex)
• Integration into general media advertising

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Great Placement on AOL
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Results so far have been strong

• Reduced monthly operating expense by 50
• Increased monthly new customer acquisition rate
  by 56 versus prior year
• Cross sell rates are up 500 versus previous
  sites
• Attrition rates are stable in spite of increasing
  our number of customers
• Citibank Online has already been ranked 1 by
  both Gomez Advisors and Forrester Research

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Gomez 2000 Rankings
Top Internet Banks for Fall 2000 ranked by
Overall Score.

• Firm Score
• 1. Citibank Online (review) 7.33
• 2. Security First Network Bank (review) 7.25
• 3. NetBank (review) 7.13
• 4. First Internet Bank of Indiana (review) 6.97
• 5. WingspanBank.com (review) 6.95
• 6. Bank One Corporation (review) 6.93
• 7. everbank.com (review) 6.87
• 8. Huntington (review) 6.51
• 9. Key Bank (review) 6.50
• 10. Wells Fargo (review) 6.49
• Source Gomez Advisors, November, 2000.

• 11. American Express-Banking (review) 6.45
• 12. Virtual Bank (review) 6.44
• 13. directbanking.com (review) 6.41
• 14. CompuBank (review) 6.40
• 15. American Bank/pcbanker.com (review) 6.33
• 16. BankDirect (review) 6.27
• 17. Bank of America (review) 6.10
• 18. U.S. Bank (review) 6.09
• 19. Fleet (review) 6.02
• 20. National InterBank (review) 5.90

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Key Challenges

• Achieving a true best in class customer service
• eCare (Chat, public e-mail, eStatements, check
  imaging, etc.)
• Comprehensive Bill Presentment - scraping and
  scanning (No strong vendor)
• Determining most effective marketing strategies
• Rationalizing all Citigroup offerings
• Rationalizing Global Citibank Offerings
• and most importantly...

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Key Challenges

• Making sure we are right about the market!
• Closely monitor progress of competitors, still
  take pure plays seriously
• Be ready to adapt quickly if we are wrong