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  1. 1. Information Systems Final Project Team C June 1, 2001 Introduction In the banking industry, competition has intensified as the consolidation wave has swept into every corner of the financial services industry. Consolidation has forced banks to rethink their corporate strategies in many areas, including geographic expansion, pricing of products and services, and efficiency optimization. Today’s banks are increasing investments in new technology to make banking more pleasant and convenient for their customers. Included in this new technology are investments in Internet strategies. At Citigroup, the Internet flows into all facets of the business, bringing together all five business focuses, including: Global Consumer: Includes Citibanking North America, North America Cards, CitiFinancial, CitiMortgage, Travelers Life and Annuity, Primerica and International Consumer. Global Corporate and Investment Bank: Includes Salomon Smith Barney, Schroders Investment Bank, advisory business, international banking and the Global Private Group. Emerging Markets: Growth through organic growth and acquisitions. Includes Worldwide Securities Services and Associates First Capital. Global Investment Management and Private Banking Group: Includes Citigroup Asset Management, Private Bank, CitiStreet, and Emerging Markets Retirement Services. Internet Operating Group: Includes,, and a strategic partnership with AOL and Oracle. With a strong focus on branding, the name “Citigroup” can be used to leverage marketing and advertising campaigns, and allow a clear identity in the marketplace and among clients. The goal of Citigroup is to allow their customers to manage all of their financial needs under one umbrella, and the Internet plays a key role in the success of this initiative. The focus of this technology assessment will be on the Citigroup banking and mortgage sectors. 1 of 8
  2. 2. Information Systems Final Project Team C June 1, 2001 Intranet-Current State Today At CitiMortgage, the intranet is successfully used for: • Communication-Media: Announcements, Communications and Departments, Classifieds, Employee Information, Presidents Corners and CitiDirectories. • Communication-Coordination: Events and Programs and Feedback Forms. • Direct Distribution: MIS Reports and National Telesales Rates. • Education: Forms and Manuals and Citi Sites. As seen in Exhibit One, under the Webmaster notes, the company is using two different mail systems, Open Mail and MS Mail. These are both ways the company unsuccessfully tries to meet the Communication-Personal needs. Currently, a portion of the employees is on Open Mail and a portion is on MS Mail. There is no coordination between the two mediums, and messages often get lost as a result. In addition, the use of the MS Mail application does not allow the use of scheduling company wide. Today at Citigroup, the intranet is successfully used for: • Communication-Media: Announcements and Events and Calendars. • Communication-Coordination: HR Connections and Business and Services. • Direct Distribution: CitiGroup Today. • Education: Life and Family and Your Workplace. There is not currently an email system that links all 230,000 Citigroup employees. There are, however, links from the Citigroup intranet to the Citigroup Internet, for the sites of,, citi on the net and, as shown in Exhibit Two. Internet-Current State Today at CitiMortgage, they are in the preliminary stages of running their business online through the website as seen in Exhibit Three: • Communication-Media: Allows CitiMortgage to advertise their products and services using the Citigroup branding. • Communication-Coordination: CitiMortgage customers can submit a loan application, review their loan application status, or view their account information 2 of 8
  3. 3. Information Systems Final Project Team C June 1, 2001 online. Business partners can enter the Wholesale Lending website, apply to be a CitiMortgage business partner, or log in and process mortgage loans, as seen in Exhibit Four. • Education: Contains communications about mortgage and home ownership information. Includes information on special programs offered by CitiMortgage. • Direct Distribution: Business partners can download their loan pipeline from the CitiMortgage website directly into their Loan Origination System (LOS). • Internet Business: Acquired Today at Citigroup, they are offering “One Stop Financial Planning” online, as shown in Exhibit Five. They are using the Internet successfully, as shown in Exhibit Six, in: • Communication-Media: Advertise product/services through AOL partnership and financial websites as shown in Exhibit Seven. • Communication-Coordination: Partner with Citigroup family, and cross sell using links between websites and offerings. • Education: Offers information on financial solutions for Personal Finance, Small Businesses and Corporate Institutional Clients. • Direct Distribution: Offers transaction access to online accounts for credit cards and banking. • Internet Business: Participating in, and C2it. Intranet-Desired State The intranet sites today for both Citigroup and CitiMortgage are robust in the categories of Communication-Media and Communication-Coordination. Employees can enter the intranet sites and view just about anything they want to know about working for Citigroup and CitiMortgage. Two areas that could be more robust are Communication- Personal and Education. While one-on-one communication with coworkers and sharing ideas and schedules is very important from a business perspective, the current state of Communication-Personal scores much lower. Where almost all categories rank a 5 from a business perspective, most categories from an Internet perspective rank a 3, with the sharing of personal schedules ranking a 1. Improvement in this area could greatly 3 of 8
  4. 4. Information Systems Final Project Team C June 1, 2001 increase productivity of staff, especially the administrative assistants that currently have to call every meeting member for their schedule. In addition, Education could be stronger. There currently is no formal site for CitiMortgage or Citigroup users to learn about the business from a company perspective. With the current turnover in the industry, having this information online and available to all employees would make rolling out a new hire-training program less labor intensive and quicker to market. Internet-Desired State The goal of Citigroup today is Global Branding. Citigroup feels that brand matters nowhere more than the Internet. Because of that belief, Citigroup’s Internet Operating Group has developed Internet Branding Standards so that all websites can quickly and consistently deploy the overall corporate branding program. Citigroup believes that the creation of a common online experience throughout Citigroup, while allowing individual business to be the primary interface for their employees, is a step to success. Citigroup Internet branding standards are attached in Exhibit Eight. The Internet sites for CitiMortgage are in continuous development today. Currently, while it may appear that customers can process transactions online, it is really the façade of a house with no actual rooms behind. Since the website is not linked directly to the CitiMortgage loan origination systems (currently three separate systems depending on the channel and processing sites of St. Louis or Farmington Hills), the users behind the scenes must scurry around like mice making it “appear” that the website is connected. This process entails pulling a barcode report from the website for one system and scanning the data into the St. Louis loan origination system, and pulling a paper report from the website for another system, and manually keying the information into the Farmington Hills Loan Origination system. In addition, the Correspondent website is actually housed on a provider website, and only launched from the CitiMortgage website. There currently is an initiative to develop connectivity between the CitiMortgage website and our loan origination systems. For the Retail and Broker channels, there is a business initiative to automate the feeds between the website and the new loan origination system. For the Correspondent channel, they are currently designing a 4 of 8
  5. 5. Information Systems Final Project Team C June 1, 2001 module for the new loan origination system that will allow direct feeds to and from the Correspondent website. Other Internet initiatives for CitiMortgage include integrating the new traffic and web technology (including branded mortgage components and calculators) into the existing sites and further facilitating and supporting electronic commerce between CitiMortgage and their customers (internal and external), giving them a choice in how to transact business. Overall requirements include speed, ease of use, convenience and a secure environment. CitiMortgage has competitors on the Internet through traditional lenders and pure e-mortgage lenders. CitiMortgage feels that as an incumbent, it has an advantage over Internet-only entrants through its network of business relationships it has in place today and through its intense brand recognition. It does not, however, feel that the Internet- only entrants are a force to be ignored. CitiMortgage realizes that the pure e-mortgage lenders do not have the same issues that haunt them, including the integration of systems upon systems acquired through time and acquisitions. The Internet site for Citigroup is hearty today. It is very strong in Communication-Media, Communication-Coordination, Education, Direct Distribution and Internet Business. The primary goals are to acquire customers profitably, sell the electronic commerce solutions and drive business to the web, and concentrate on revenue opportunities, productivity and expense reduction. In addition, through its C2it person- to-person Internet payment service, Citigroup is looking to expand its market. With the recent announcement of the purchase of Grupo Financiero Banamex-Accival, the owner of Mexico’s Number 2 bank, Citigroup will be marketing more aggressively to Hispanics. C2it can be used to send payments to recipients in 30 countries, and with the estimate of Mexican workers sending home an estimated $8 billion a year, Citigroup can target these consumers through C2it’s international expansion. Citigroup is also targeting India and other Asian countries. 5 of 8
  6. 6. Information Systems Final Project Team C June 1, 2001 Leadership Intentions Model The Leadership Intentions Model, how leaders thought about the change, can be defined as follows: Leaders’ Intentions Model Definition Experimental Freedom Change developed to test the waters. Unclear about desired result. Actual result is an improvement. Process Cause-Effect Change developed specific to the process. Want efficiency. Actual result is cost savings, reduced staff, quality and quicker development. Strategic Context Change developed for business opportunity or survival. Based on preconceived expected outcomes as measured by value to the company. Cultural Dynamic Developed not to have specific outcomes as targets, but that by providing a richer technology capability, the general atmosphere and the social practices of the organizational members will improve. At Citigroup and CitiMortgage, the Internet strategy is very strategic in nature. Citigroup and CitiMortgage management view the Internet as important for critical business reasons, including competing in the global marketplace, offering brand recognition and cross sell opportunities between all of the Citigroup businesses, and staying at the forefront of technological innovation. With pressures from both traditional players and e-mortgage only players, Citigroup and CitiMortgage are investing in Internet technology to provide barriers to entry, offer expanded online services with more options, flexibility and service and to work to de-commoditize the offered products. In addition, 6 of 8
  7. 7. Information Systems Final Project Team C June 1, 2001 they are investing to increase B2B and B2C customer market share and B2B market penetration. Through leveraging relationships with Fannie Mae, Freddie Mac, GNMA, MBA and Xpede, Citigroup is striving to pick the right partners and forge strong alliances, facilitating changing the business model where appropriate and providing tools for growth to the business units. Stage Model of IT Assimilation In the Stage Model of IT Assimilation, the four phases can be defined as follows: Phase Definition Phase 1-Initiation Innovation/Organic. Trial and Error. Loose controls. Phase 2-Learning/Adaptation-Expansion Innovation/Organic. Creative. Unpredicted benefits. Phase 3-Rationalization/Control- Control/Mechanistic. Formal procedures Formalization and education. Controls and standards. Phase 4-Maturity Control/Mechanistic. Widespread diffusion. Common knowledge. Changes in culture. Currently, Citigroup and CitiMortgage are in a Phase 3, Rationalization and Control Phase. With the recent development of Internet branding standards, Citigroup is promoting a consistent approach to Internet branding and navigation. Having these controls and standards, Citigroup allows only approved business names and logos, and highlights the “corporate equity of blue.” The Blue Wave, as described in Exhibit Eight, is an integral part of the Citigroup identity, and it provides them with a unique look for online communications. The guidelines announced are very top down, and rely on rigid and routine tasks for website development. While the Internet branding standards are a new development, eventually they will become commonplace, and the Internet strategy from this standpoint will develop into a Phase 4, Maturity. Conclusion While management may have strategic intentions about the Citigroup Internet strategy, the business lines are operating more under the process intentions. Similar to the Britannica Disorder, the business lines are working to automate current processes 7 of 8
  8. 8. Information Systems Final Project Team C June 1, 2001 online, without reengineering the process. The goal for the people in the trenches is to make their current process faster and gain efficiencies. As in the Harvard Business Review article, “Reengineering Work: Don’t Automate, Obliterate,” the business lines are often mechanizing old ways to do business. Realizing that there are differences in the intentions between the line managers and the senior managers is the first step toward addressing the corporate strategy. In order to bring the line managers to a strategic level, the company must address its need to survive in the new Internet savvy environment. With the speed of transactions today, customers are no longer willing to wait weeks to complete a financial transaction. They want it fast and they want it now. Breaking out of the process intention and moving toward the strategic intention is the only way the company and its businesses can sustain and retain current customers, and gain new ones. Collectively in the industry, banks are making a mess of moving their businesses to the Internet. Many banks are struggling to develop a coherent and consistent Internet strategy. It has been difficult to blend the business line manager’s knowledge of the business with the e-commerce manager’s knowledge of the technology. For some banks, the Internet banking has been set up as a separate business, competing with the brick and mortar branches. Also, consumers have been slow to leverage off of all opportunities afforded through online transactions. While customers may be researching opportunities and educating themselves through use of the Internet, many take that knowledge to a brick and mortar site to execute the final transaction. With the Internet still in its infancy, Citigroup and CitiMortgage must continue to counter the risk that consumers may lose confidence in the web as a means of fulfilling financial transactions, and explore new and improved ways to provide the customers with options to fulfill. 8 of 8