Case Study: Citibank’s Indian Business Model

Factors for success

Universal banking strategy:

Citibank has been one of the early adopters of a universal banking strategy. The bank has leveraged the changing demographic profile in India by targeting the attractive retail-banking segment. Citibank was a pioneer in consumer banking, being one of the first to introduce focused consumer lending programs and electronic banking. For the corporate banking segment, Citibank was first to launch cash management services in 1986 and it continues to be the leader in this segment. In 2001, throughput for this channel was US$ 25 billion (about 6 per cent of India’s GDP). Currently over 2,250 corporations and financial institutions in India use this platform. As the leading custodian bank, Citigroup has over US$ 13 billion of custody assets under management, an 8 per cent share of the foreign exchange market. The Bank has also lead managed and participated in raising capital for Indian companies through Euro loans, GDRs and FRNs in excess of US$ 2.5 billion.

Targeting customer segments with focused products:

Citibank India has been rolling out products targeted towards specific customer segments;

• Citibank launched the Suvidha Account for salaried customers in 1998. At the time of launch, Suvidha account offered unmatched benefits like utility bill payments, automatic creation of fixed deposits, direct credit of salary reimbursements etc. The success of Suvidha created a new product platform for the Citigroup global franchise.
• Citibank launched Citigold Wealth Management – a set of global financial planning tools and wealth management services in 2002, to complement its range of banking services. This is targeted at high-net-worth priority customers who want to grow and protect their wealth.
• For working women, Citibank has launched the Woman’s Account in 2003. This is a zero-balance savings account scheme for women. The scheme also offers housing loans at a concessional rate of 7 per cent per annum.
• For NRIs, Citibank has introduced services like Citi Online Remit and Citibank Preferred NRI Account

Developing financial markets in India:

Citigroup has been instrumental in developing the financial markets in India through the launch of innovative and global products in India. It has been a pioneer in the securitization market, with creation of the first PTC in 1996 and has created liquidity in this segment through active purchase and sale of securitized paper as well as listing of the PTCs on the Indian stock exchange to provide secondary market liquidity to investors. With the liberalization of the Indian market, it has also introduced complex derivatives and options structures to enable customers to manage their risks more effectively.

Strong parental support and strong local management:

Citigroup’s global platform allows it to introduce new products quickly as compared to competitors. At the same time, by localizing products, Citibank India offers its customers the advantages of a local bank. A strong local management effectively supported by a high-quality workforce has been a key factor for Citibank’s success in India. The Indian subsidiary has the flexibility to innovate and launch new products within guiding principles defined by Citigroup, USA.

Leveraging the India Advantage

• Role model for similar international markets: Citigroup has developed segment specific solutions for small and medium enterprises (SMEs) in India. These successful solutions are being adopted as models for other Asian countries like Taiwan and Korea. Similarly, the solutions developed by Citigroup for Non-resident Indians (NRIs) have been adopted successfully in countries like Pakistan.
• Source for managerial talent: Citigroup, worldwide has recognized and leveraged Indian managerial talent. Personnel from Citigroup India are routinely assigned to global positions at Citigroup. Over 300 professionals and staff from its offices in India are now in Citigroup’s international cadre.
• Software development for global operations: Citigroup has made India its global software development, software maintenance and BPO hub. Polaris Software Lab, an India-based leading global provider of financial technology solutions and offshore IT services, has developed, deployed and supported solutions for over 10 million Citibank customers in 70 countries across the world.
• Back office operations for Global operations: Citigroup has established e-Serve International Ltd. (formerly known as Citicorp Securities & Investments Ltd.) in India, for its BPO activities. e-Serve focuses on providing IT-enabled solutions to the financial services industry, supported by latest technology and robust infrastructure for volume-intensive processing and the customer care needs of its customers located in over 25 countries across North America, Europe, Africa, South Asia and Middle East. e-Serve handles all the cash management and trade finance transaction processing for Citibank India, Sri Lanka and Bangladesh; credit cards services for Eastern Europe, Middle East and Africa and bank back-office processing work for Citibank in Europe.