​Citi Australia's Silicon Valley approach to out-banking the big four

Citi looks to open APIs, partner with fintechs, and understand the gap left unfilled by Australia's dominant financial services providers.

The financial services sector in Australia is largely dominated by four major banks, which combined have significant pricing power and higher than average returns on equity and large market shares; they also hold a 95 percent share of the entire Australian finance industry.

In order to be successful in such an environment, the local arm of Citi realised it needed to bring something to the table that the other players did not.

Speaking with journalists in Sydney on Tuesday, Anand Selva head of Consumer Banking for Asia Pacific at Citi, said his organisation has undertaken a transformation that sees it position itself as a digital bank -- focusing on the customer and not being afraid to partner with new players in the market.

The first step, according to Selva, was realising that customers have outpaced financial institutions in moving to digital spaces, in particular APAC, where he said there is an unprecedented level of mobile penetration.

"Clients have already moved to mobile devices and financial institutions like us are catching up now to deliver services to the platforms the clients are already on," he explained.

"We have our own internet banking sites, we have our own mobile banking apps, but the question is how are clients in the future going to interact with [these platforms]?"

He said, however, organisations cannot simply decide to digitise its products and services; digitisation must instead occur only where it makes something simple.

"You can't digitise things unless they're radically simple -- that's what fintechs try to do -- investigate the pain points of customers and rub down the pain points," he said.

"Digitisation doesn't happen by just putting some functionality onto your mobile app or website. As a company we had to change the culture of our employees, people had to start thinking digital. The mindset had to change and we had to become more agile, more nimble, you have to work like a Silicon Valley firm."

Just like any digital transformation in 2017, Selva said it's important to understand that as technology capabilities are being built out, a heavy focus is placed on the culture change within.

"We have moved to agile, we are working in scrums -- that's how we work, smaller groups of people working together, working on things in parallel rather than in an assembly line like traditional banks used to do," he said of Citi's cultural transformation.

"The way we look at digitisation is in two pieces as we want to be a leading digital bank: we've got to digitise the bank for today, and digitise the bank for the future."

As a foreign bank in the Australian market, Julian Potter, Consumer Banking CEO for Citi Australia, concedes his organisation is up against dominant domestic players "doing fantastic things".

"It would be hard to say the things you see coming in from the big four aren't globally leading in many respects and we have to be fully mindful of that," he said. "So what is it that Citibank brings to the marketplace? It is being part of this global network which allows us to capitalise on and keep a close view of trends -- we have to make sure that the global network brings value to clients."

Citi has invested an enormous amount of energy into opening up its application programming interfaces (APIs), something the Australian House of Representatives Standing Committee on Economics is eager to see implemented across the entire local market.

Citi opened its own API sandbox in Singapore late last year -- with imminent plans to extend this to its 16 other markets -- and the organisation now has over 1,000 registrations from the likes of fintech firms, developers, and large enterprises.

Selva explained that there is currently 150 to 180 entities actively playing with the sandbox, which comprises dummy data on approximately 80 percent of its total transaction codes. As one example, airline giant Qantas plugs into 40 different Citi APIs to support its own infrastructure.

Of importance to both Selva and Potter is how quickly Citi can go live with innovations and new products and services as a result.

"It's a much faster and more efficient way of functioning -- we believe that's the way to connect in the future," Selva added. "We were the first bank to actually open up our APIs in such a big way and that's a big part of our transformation in digital."

Another factor in Citi's transformation is realising the importance in working with fintechs; Selva believes the future is about partnering with them. It's an idea echoed by the likes of Capgemini.

"We bring our own strengths, the brand, client base, operating in a regulated environment, we have the products, we have the data -- the fintechs bring the technologies, they solve specific pain points, which we like, and we connect the two," Selva added.

In India, Citi launched a video-based wealth management platform, described by Selva as similar to Google Hangouts, where customers can connect to work through their particular requirements. The technology was developed by a startup that won a mobile challenge Citi arranged in India and is being prepped for global rollout.

Citi believes there is also a future in biometrics, with Potter noting Citi is the only institution to launch biometrics-based services in over eight markets. In APAC, he said 1.5 million customers have signed up in the few months since launch.

Despite the willingness to send processes to a digital platform, Selva believes there is still a handful that should be kept offline -- for example, wealth management.

"We believe it will still require human touch, with expertise and customised information," he explained. "The human touch will be supported by a digital ecosystem."

Citi also predicts social media is where the next wave of innovation is going to be, with Potter not ruling out making a move in the local market soon.

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