Citi’s Path to Digitization

Citi's pursuit of creating value for its customer through digitization starts with a rethinking of its operating model for an elite group called "Citi FinTech."

Last year, digitization’s threat to banks was coined “banking’s Uber moment,” [1] comparing the potential downfall of banks to the gutting we have seen in the taxi industry. As advances in technological innovation and emerging FinTech startups abounded over the past few years, many traditional banks took steps to protect themselves from the dangers of this new disruption. Citi is among one of the more dedicated innovators who has adapted to the changing digital environment in an effort to keep up with rising competition from non-traditional incumbents and entrants.


In Citi’s digital arm, its business model is structured around creating value for a newer type of consumer who prefers quicker methods of banking using digital platforms. An example of this consumer who Citi aims to help is who CEO Mike Corbat refers to as the “serial balance checker.” While she used to have to contact Citi’s call center and endure long wait-times, she can now use Citi’s online platform and mobile app to check her balance as many times a day as she wants [2]. In this very simple example, Citi is creating value for its customers through digitization.


Of course, the company is taking on many more strategic steps to enhance certain operating models that will deliver value to the client. Citi, who was named Best Overall Global Digital Bank for 2016 by Global Finance magazine [3], knew that it would be challenging to completely change the operations of the traditional and massive banking giant, so the company instead took on a smaller approach. They created Citi FinTech, a group comprised of top executives from across the firm’s many divisions as well as seniors they poached from from tech companies such as Amazon and PayPal [4]. By keeping the group small – 40 people of the firm’s 230,000 – the hope is that this elite group can operate more like a start-up in terms of speed, agility, adaptability, and experimentation. This unique operating model has not been adopted by any of Citi’s peers, and is integral to delivering the value that its business model seeks to create.




The group has done significant work since its formation. They created Citi’s mobile app to increase the ease with which customers bank. They are currently working on releasing an improved app, which is expected to “allow direct-payment methods from person-to-person or person-to-company, [and include] a voice, touch or face-activated account log-in [and] an easy credit card payment/check…” [5] Citi was also the first bank to launch an app on Apple Watch. Creating the product in an impressive 120 days, Citi’s entrance into the wearables market was a bold example of the company’s commitment to fast-tracking its digital rollout [6]. One could argue that it could not have been executed so swiftly if the company were still utilizing its archaic and bulky operating model, rather than its newer and nimbler process under Citi FinTech.

Features of the Apple Watch app included innovative elements that its mobile app lacked, including color images that alerted users to how close they were to their credit limits. The company was able to recognize and fulfill millennials’ need for tools “that show them how they are spending in order to become wise about what they are doing,” and in the process created value for their customers [6].

While the company has taken steps to create value externally using digital technology, I believe that they could also be leveraging digitization to create value for themselves. Recognizing the digital shift, they have begun shrinking their physical branch presence by rolling out the concept of “smart branches,” [2] but there is still more that can be done. Many of Citi’s internal processes, including client onboarding, customer relationship management tools, and back office operations are still time-consuming and costly processes. One area in which Citi could invest more is their trade settlements operations. According to a report, “the cost of settling trades in the finance industry runs as high as $80 billion a year. If each transaction that requires human verification is included, the figure is much larger” [7]. Similarly to how the introduction of ATMs caused a drop in the need for bank tellers, more digital systems for settling trades could save Citi both the manual time needed to perform these tasks as well as the costs associated with them.

A potential solution comes from the idea of blockchain, whose complex technology creates a ledger on which transactions are recorded for all parties to see, such that the transaction history of any security traded is both traceable and verifiable. Though this technology has not been used for trade settlements yet, if Citi can invest in building a feasible platform based off of the blockchain network, it would be able to significantly improve its business and operating models.

Word Count: 794

[1] “Banking’s ‘Uber moment’ is a ‘big threat’;” Kharpal (2016):


[2] “Citigroup on engaging the digital customer;” (2015):


[3] “Citi Retains Top Honor in Global Finance Magazine’s 2016 World’s Best Digital Bank Awards;” (2016):


[4] “Here’s How Citigroup Is Embracing the ‘Fintech’ Revolution;” Gandel (2016):


[5] “All-new Mobile Banking App: Pay ‘Citibank’ Bills Password-less!!!;” Lagura (2016):


[6] “Why Citi Was the First Bank on the Apple Watch;” Wisniewski (2015):


[7] “Blockchain is Banks’ Secret Sauce;” Langner (2016):


Rosie the Robot in 2016


Payments in Africa’s largest market

Student comments on Citi’s Path to Digitization

  1. Thanks for the post HBS_TOM.
    I have been a Citibank / Citigold customer for as far as I can remember and their big digital transformation push at first really excited me! That excitement was very short lived though when I found out they were going through massive branch closures throughout the whole state.

    When I lived in Seattle, I was appalled to find that there were no Citibank branches in the entire state and now that I am back in Boston, I realized that they shut down all their Massachusetts branches as well. (

    While these are probably great cost-cutting avenues that are possible only because of digitization, the problem I personally have with this approach is that their digital offerings are not FULL substitutes of what their branches could offer. For example checks over a certain value still have to be deposited at a physical branch or a special ATM. Secondly, their digital substitutes are extremely confusing. They have ATMs at all 7-eleven branches but each ATM has different capabilities (some take deposits, some only do check transactions etc.) Even their mobile apps across different platforms have different capabilities.

    To me, it seems very clear that Citibank was facing some very serious cost pressures and the digital group provided an easy and cost-effective out. However, due to time pressures, it seems like they are still lacking a holistic digital strategy that takes all their stakeholders into account. Removing a key party of a supply chain (branches in this case) requires that the roles it played in the supply chain are absorbed by a different part of the supply chain. Since Citibank has still failed to do that appropriately, I am now the begrudging customer of a CapitalOne 360 account. 🙁

Leave a comment