E-Business Strategy in an Online Banking Services: A Case Study of CITI BANK??he outline of the case study is as follows:?.??bstract: summarises the case study and more importantly highlighting the reason for the implementation of an E-Business strategy by CITI BANK.?.??ntroduction: Provides a broader argument for the adoption of an E-Business strategy based on the Business-Factors in the United Arab Emirates (UAE)?.??ata is also provided for analytical purposesb.??nline functionalities are also provided to highlight the scale of the business strategy?.??Some evaluation data is also provided to measure success or failure of the e-business strategy??????ead the case study and answer the following questions:??bstractBanks today are aware of both the threat and the opportunity that the Web represents. No traditional bank would dare face investment analysts without an Internet strategy. But even a detailed and thoughtful approach to the Web does not guarantee business success. The main purpose behind the launching of online banking services is to provide the customers with an alternative, more responsive and with less expensive options. With options just a click away, customers have more control than ever. They expect real-time answers and superior usability. They also want personal attention and highly customized products and services. The focus of e-business must always be on the customer. On the other hand, the technology and the business structure follow on form of the value you intend to provide to the customer. This paper evaluates the success of the e-business model and e-business strategy implemented by Citibank in the United Arab Emirates in offering its retail Internet Banking Service; Citibank Online.?eywordsElectronic Banking, Online Banking, Retail Banking, Internet Usage?IntroductionE-business relies on the development of new business strategies based on networks. The world has become increasingly inter-connected via telecommunication networks and computers. These offer fast, flexible, and cost-effective ways of doing business.The Internet is driving the new economy by creating unprecedented opportunities for countries, companies and individuals around the world. CEOs worldwide recognize the strategic role that the Internet plays in their company’s ability to survive and compete in the future. To be competitive in the Internet economy, companies need to harness the power of the Internet successfully.Citibank UAE – Background InformationCitibank is a subsidiary of Citigroup, a strong financial brand with more than 100 million customers, 5.9 million online relationships and a global reach spanning 100 countries. Citibank UAE started its retail business in 1987 in a very highly competitive environment offering a comprehensive line of high-quality financial services targeted to the affluent and middle income segments. Citibank has been perceived, as at the edge of innovation leveraging its global expertise, it was the first bank in the UAE to introduce innovative e-business solutions like:1) CitiPhone – 24 hour Phone Banking Service2) ATMs- Automated Teller Machines3) CitiAlert – GSM notifications service4) E-Card – Internet Shopping Card5) CitiDirect – Corporate Internet Banking Service, and6) Citibank Online – Retail Internet Banking Service.In the year 2000, Citibank had 160,000 retail customers serviced mainly through five branches, six ATMs and CitiPhone. Given the Central Bank restrictions on opening additional branches, being a foreign bank, the banks’ e-business strategy was to focus on remote channels of distribution, mainly Internet Banking solutions.Ms. Sarah Hussain, Web Administrator at Citibank says, “Given the kind of Internet explosion which the market is going through, Internet is the channel of the future, it is critical for Citibank to leverage this channel aggressively and gain an early and dominant leadership”.What encouraged Citibank to proceed with its investment in this direction is the tremendous growth of Internet usage since its introduction in 1996. According to Etisalat, the only Internet Service Provider in the UAE, in 2003 the number of Internet users was 1,105,000 in a country with a population of 3.7 million, this number is fairly high and expected to increase even further.Table 1:?umber of Internet users in some of the Arab countries (Etisalat, 2003)In an industry that has became increasingly serviced through remote channels, Citibank UAE wanted to leverage on the advanced technology available within Citigroup to stand out, hence Citibank Online was launched in 2000 offering a comprehensive list of services/functionalities. E-business StrategyBased on Porter (1980) generic strategies, Citibank opted for a differentiation strategy for its home banking service by offering a superior web banking option with powerful and relevant functionalities wherein customers can access/operate their banking accounts on the net with full confidence and ease. ?n the year 2000, there were only four local banks offering simple home banking solutions, Citibank wanted to be the first multinational bank to launch a multifunctional home banking service and own the category before competition becomes fierce in the field.Citibank’s mission was to be a leading e-Financial Services company in the UAE by becoming trusted, premier e-business enabler for its customers.?The objectives of launching Citibank Online were:1) Extend its network and overcome the limited branch situation.2) Achieve savings in CitiPhone/Branches’ operating costs by diverting customers to the Internet. Citibank Online has one of the lowest “costs per interaction” as compared to the ATM, phone banking or branch banking. It contributes immensely as part of the Strategic Cost Management initiatives the bank is implementing without compromising on the quality of service.According to an online banking report published by Ernst & Young, the transaction costs of the various banking channels are as follows:Branch $1.07Call Centre (human) $0.85Automated Response System (AVR) $0.44Automated Teller Machine $0.27Dialup PC banking 1.5 CentInternet Banking 1 Cent??) Meet the increased consumer demand for quick and secure banking solutions, anywhere, any time on any device, this is important in staying ahead of competition.4) Enhance the brand imagery and values in the mind of the customers and the prospects by owning this channel especially that Citibank is seen to be innovative and ahead of most other banks in terms of technology and product development. 5) Create another arm for deepening customer relationships through cross sell and acquisitions of new customers.Updated,?able 2?hows the list of Citibank Online functionalities covering all Citibanks’ products in the UAE.Table 2:?itibank Online functionalitiesIn order to encourage trial and conversion, Citibank reduced the charges for many services if used on Citibank Online as part of its pricing strategy. Citibank addressed the security issues by using the industry level of encryption of 128 bit Secure Socket Layer (SSL) encryption. The bank also uses firewalls to prevent unauthorized access and an automatic ‘timeout’ feature if no activity was detected for a specific time period. The online session is launched by using a password selected by the customer. E-business ModelCitibank Online is considered as a standard Business to Consumer approach, the e-business model Citibank is using can be classified as “Merchant”. See?able 3.?able 3:?-business modelsWithout the intervention of the AVR, ATM or CitiPhone Officers, a Citibank customer can access and operate all his relationships with Citibank at a click of mouse in complete privacy. In doing so, Citibank is balancing between security and accessibility of information leveraging on a robust e-banking service available within Citigroup.?valuation of E-business strategy and modelMs. Sarah Hussain, Web Administrator at Citibank says “The results of the service represented in the information management system reports covering the performance of Citibank Online from 2001 to 2004. ?able 4?hows that the number of active users. This is as a result of the heavy investment in promoting and educating the customers on the gained benefits of using this service. Citibank invested around $350,000 towards the marketing budget in the first year of the launch.Table 4:?umber of active Citibank Online customersTable 5:?ew accounts opened through Citibank OnlineCitibank Online is proving to be a successful acquisition and revenue-generating channel, despite the fact that the management did not expect any revenues to be generated for the first three years of the launch.The deployment of the program to Citibank UAE, played a very important role in gaining those revenues, as Citibank UAE did not fund the development work, there were only a couple of adjustments made to the service to suit the UAE requirements.According to Timmers (1999) there are two dimensions of analyzing the e-business model, ise these to answer part of the questions..??ND OF CASE?uestion 11.1 List down and explain the challenges Citibank UAE was facing and relate these challenges to Porter’s forces ?of competitiveness???????????????????????????????????????????????????????????????[6]?.2 Explain the business model of CITI BANK and use the data to showcase how the revenue stream was arrived at [Hint: how did Citi Bank create value while expanding business]???????????????????????7]?uestion 2?.1????Explain how the e-business strategy was aligned with business vison, mission and objectives of CITI BANK???????????????????????????????????????????????????????????????????????????[6]?2.2????What indicators could be used to measure success of Citi Bank??Explain how)????????????[6]?????????????????ND OF CASE STUDY QUESTIONSBusinessMANAGEMENT BEB5999
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