Citi Group: From traditional banking to a world leader in digital banking
Citigroup the US global bank When the economic crisis in 2007–2008 almost went out of business has taken a step back to redefine the company revitalized strategy and change the core business to become the world’s leading digital bank that meets the needs of people around the world in the digital world
In the 2000s, Citi became a true financial supermarket, with many banking operations such as stock broker bond trading, insurance, and asset management. Citi strives to offer all things financial to everyone around the world including massive acquisitions.
One of the businesses that Citi has acquired is subprime lending which is the market that collapsed in 2007 and triggered the financial crisis, almost causing Citi to go out of business in 2008 before being rescued along with other banks with $45 billion in federal funds in exchange for Citigroup shares (Citi fully repaid the U.S. government in December 2009).
Jane Fraser then head of strategy and is now currently the CEO of Citigroup said that;
‘Crisis forced us to redefine and restructure the new company to create sustainability in the eyes of regulators, personal customers, corporate customers, and employees as well.’
Fraser concluded that Citi needed to focus on businesses that were eligible to win. Citi had to be smaller and more consistent to be stronger. Citi needed to return to its roots.
Firstly, Citi was and is a bank, not an insurance company, asset manager, hedge fund, or private equity company.
Secondly, what leaders do is that Citi has to maintain and exploit the universality. This is one of the unique advantages of Citi, which is especially valuable for multinational institutional clients who need a manageable partnership, transaction complexity, currency, and the risk of business complexity.
As a result, Citi has established Citi Holdings as an affiliate within its corporate structure to manage and sell non-core assets.
Citi transforms into a “Leading bank for customers that meet the needs of people around the world in a digital world” with a strategy based on 4 principles:
1. Be Clinical Evaluate businesses that Citi can maintain. or maintain a more market-leading position in the digital world
2. Be Focused Focus on investments and resources directly on businesses that can drive strong growth and improve long-term returns
3. Be Connected Create connections to benefit businesses together
4. Be Simpler Deliver simpler services, reduce procedures, rules, and hassles to better serve our customers and create new value for the stakeholders involved.
This led to a number of broader decisions, such as doubling wealth management and exits from its consumer business in 13 markets across Asia, Europe, and the Middle East where Citi has no scale to succeed.
Citi’s transformation is a bold move. It takes a lot of courage to dramatically cut down on the organization and grow the business from a smaller core but stronger than ever before.
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Source: www.citigroup.com, Citi 2022 Investor Day (March 2, 2022), Mahadeva Matt Mani and Paul Leinwand (2021) [Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future]
