Name: Insights: How Citigroup Balances Digital and Traditional Banking
Uploaded: 2020-03-10
Duration: 5 min 32 s
Description: CEO Michael Corbat explains how the company is running 'two banks' to meet customer needs.

 ADAM LAHINSKY: Adam Dell who is now with Marcus, the Goldman Sachs unit, he said there's only two kinds of banks-- those who are screwed and those who don't know that they're screwed. Which one is Citi? MICHAEL CORBAT: Well, it's a bit of a Hobson's choice. But I think you're screwed if you're in denial. And I would say as an institution, we're absolutely not in denial. And to that soundbite that was just that, the next chapter of banking is being rewritten as we speak, the next chapter is digitally-led, the next chapter has a different set of expectations. And if we're status quo, you know what we are dead? But we're a 200-year-old institution that's reimagined itself several times, and we are very much in that process today. ADAM LAHINSKY: Great. I want to start with the reimagining that you're doing right now and that's your consumer banking strategy. And you're in the middle of something interesting in that you're trying to become a national consumer bank again after having retrenched from having been one. Explain how you're going about doing that. MICHAEL CORBAT: So we have a bank today, a depository bank today about 700 branches across the US that are predominantly located in six cities. Compare that against Chase, Wells, BFA, their branch counts in the thousands. What we have and what we think is an advantage we have is that we actually have a national credit card brand, that today, we've got about 28 million people in the United States that carry the city card. Only about less than 10% of those are actually bank customers. So I've got roughly 25 million people in the United States who carry a piece of our plastic. We know who you are, we know what you spend on, we know, by the way, who your bank is, we know what matters to you, and likely, we've probably got some affinity or reward program that resonates. It could be thank you points, could be American Airlines miles, could be double cash back. And so in there, how can I actually use that to convince you to be a bank customer. When you think of today's age, our ability to provide our branch, our bank mobile-y, probably never been a better time to be able to do that. ADAM LAHINSKY: So you have a very clearly defined addressable market and that's not that's not all of it. You'll take your cell banking services digitally to the people who aren't current customers. MICHAEL CORBAT: Absolutely. Today, what we're forced to run is actually two banks combined into one-- a digital bank that meets the needs of those that want a truly digital banking experience, and at the same time, the analog bank. Because if we take the analog bank away and say the branches are gone, you can't speak to anybody, we would lose some probably reasonable significant amount of our bank customers. Oftentimes in certain industries, things occur slower than people might predict. An the example I would use that we've lived is the ATM. Today, ubiquitous, everywhere. We have 60,000 of them in the United States. It was introduced in 1977. People often say that Citibank invented it. We didn't. We found it in a garage in Stockholm, Sweden. We commercialized it. The first year in the United States that branch count actually went down, i.e., there were less branches in the United States at the end of the year than the beginning of the year, was 2018. And at the time, people said, listen, today, I can take cash out of it. Pretty soon, I'll put cash into it. Pretty soon, it's going to be able to do all these things for me which today it can. Branch utilization has changed, but the demand around the branches are still there. And so when I think of this move to digital, it's a continuum of what I've described, those who expect the truly digital, to those that are living in analog with a big cohort in between, and a continuum that will move over time. ADAM LAHINSKY: And talk also if you would about cash because I feel like cash has been something of a dirty word at this event, and you don't think so. MICHAEL CORBAT: Well, again, going back to things create their own pace. What's interesting, if I ask the audience and said that two billion people in the United States-- and when you think about checks, we think of checks as being antiquated. I moved to the UK for the first time in 2000 and checks were pretty much already taboo. In the UK, we already had chip and pin. We didn't get chip and pin-- we still don't have chip and pin in the US. We have chip and signature here to 2019. But last-- ADAM LAHINSKY: It's kind of embarrassing. MICHAEL CORBAT: --there were almost $30 billion checks still written in the United States and cash utilization continues to rise. So again, shifts are happening, behaviors are changing, but they're going to come at their pace. And our challenge of running an established institution is we want to stay ahead, a couple steps ahead of our customers, but we can't get so far ahead we'd lose them. And so we want to make sure that we're developing the right things along the way but we can't get so far ahead that we lose them. 

Insights: How Citigroup Balances Digital and Traditional Banking 

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The company is running "two banks" to meet customer needs. 

How Citigroup Balances Digital and Traditional Banking

CEO Michael Corbat explains how the company is running "two banks" to meet customer needs. 

Adam Dell, who's now with markets the Goldman Sachs unit, he said. There's only two kinds of banks. Those who are screwed and those who don't know that they're screwed. Which one is city? Well, it's a bit of a Hobson's choice, but I think you're screwed if you're in denial. And I would say is an institution were absolutely not in denial on to that sound bite that was just said that the next chapter banking's being rewritten as we speak. The next chapter is digitally led. The next chapter has a different set of expectations, and if we're status quo, you know what? We are dead. But we're 200 year old institution that's reimagined itself several times, and we are very much in that process today. Great. I want to start with the meat, the re imagination, re imagining that you're doing right now and that's your consumer banking strategy and you're in the middle of something interesting and that you're trying to become a national consumer bank again after having retrenched from having been one explain how you're going about doing that, so we have a ah bank today, a depository bank. Today, about 700 branches across the U. S that are predominantly located in six cities. Compare that against Chase wells B of A. Their branch counts in the thousands. What we have and what we think is on advantage we have is that we actually have a national credit card brand that today we've got about 28 million people in the United States and carry city card on Lee about, uh, less than 10% of those are actually bank customers. So I've got roughly 25 million people in United States carry a piece of our plastic. We know who you are. We know what you spend on. We know by the way who your bank is. We know what matters to you. And likely we've probably got some of 50 affinity or war reward program that resonates. It could be Thank you. Points could be American Airlines. Miles could be double cash back. And so in there. How can I actually use that to convince you to become be a bank customer? When you think of today's age, our ability to provide our branch, our bank mobile e probably never been a better time to be able to do that do you have a very clearly defined addressable market? And and that's not that's not all of it. You you'll take your cell banking service is digitally to the people who aren't current craps today. What we're forced to run is actually two banks combined into one a digital bank, that meat the needs of those that want a truly digital banking experience and at the same time, the analog bank. Because if we take the analog bank away and say the branches are gone, you can't speak to anybody. We would lose some probably reasonable, significant amount of our bank customers. Oftentimes, in certain industries, things occur slower than people might predict. And the example I would use that we've lived is theeighty m today ubiquitous everywhere, you know. We have 60,000 of them in the United States, was introduced in 1977. People often say that Citibank invented it. We didn't. We found it in a garage in Stockholm, Sweden. We commercialized it the first year in the United States. That branch count actually went down. I There were less branches in the United States at the end of the year than the beginning of the year, which 2018. And at the time people said, Listen, today I could take cash out of it. Pretty soon, I'll put cash into it. Pretty soon it's gonna be able to do all these things for me, which today it can. Branch utilization has changed, but the demand around the branches are still there. So when I think of this move to digital, it's a continuum of what I've described. Those who expect the truly digital to those that are living in a log with a big cohort in between and a continuum that will move over time and tonic. Also, if you would about cash, because I feel like cash has been something of a dirty word at this event, and you don't think so well again. Going back to things create their own pace. What's interesting If I asked the audience and said that two billion people in the United States and when you think about checks right, we think of checks is being antiquated. I moved to the U. K for the first time in 2000 and checks were pretty much already taboo in the UK We already had chip and pin. We didn't get chipping pin. We still don't have chip and pin in the US We have chipping signature right here in 2019. But a lot of bear. There were almost 30 billion checks still written in the United States, and cash utilization continues to rise. So again, ships were happening. Behaviors are changing, but they're gonna come with their pace. And our challenge of running and established institution is we want to stay ahead a couple steps ahead of our customers. But we can't get so far ahead. We lose them since we want to make sure that we're developing the right things along the way. But way can't get so far ahead that we lose him.