Citi's Asia consumer business gains from its digital strides

Singapore

CITI has reaped a clear payoff from its digital investments in its consumer business in Asia, having posted seven consecutive quarters of growth as at the first quarter of 2018.

The evidence of this digital dividend comes from growth despite the reduction in its physical branches by about 30 per cent, with its consumer deposits still up by 3 per cent from a year ago to more than US$95 billion today, a senior executive told The Business Times.

Its first quarter revenue this year at US$4.13 billion - up 12 per cent from a year ago - was its strongest quarter for revenues since the fourth quarter of 2011. The revenue gain is coupled with a cost benefit from going digital: between 2016 and 2018, Citi's consumer bank operations' "cost-to-serve" fell by 10 per cent, with the net income in the first quarter now at US$1.12 billion. Asia remains the largest income-generating region outside of North America for the US bank.

"It's been 21/2 years of transforming from an analogue to a digital business," said Anand Selvakesari, head of consumer banking for the Asia-Pacific and EMEA at Citi in an interview. "Clients are now saying: 'Bring banking to me'."

Bringing banking to customers is a big shift for banks that used to wait for customers to show up at their doors. Banks today are taking lessons from Big Tech firms that have organised themselves around consumers' lifestyles, with China's WeChat a prime example of a technology service that can branch out effectively into financial services. Like many other banks, Citi has offered banking services through WeChat, and is the first to offer similar banking services through the Line app in Thailand. Consequently, call centre enquiries are down 40 per cent in China and 22 per cent in Thailand, said Mr Selvakesari. By offering voice biometrics as a form of authentication, call durations have also shortened by about 30 seconds each.

Trends speak to the changing digital habits of consumers in Asia. Today, nine out of 10 retail transactions are done through digital channels at Citi, while 40 per cent of consumer loans are acquired online.

Singapore is also getting on board with a centralised know-your-customer data repository, so banks here can easily access customers' data to open accounts. Citi has also opened up close to 100 application programming interfaces, or APIs, of its services to partners that can help to distribute its services. Such partners include aggregators that sell credit cards through their platforms. One in three Citi cards are acquired online.

A physical branch network gives lenders a limited reach, Mr Selvakesari observed. As an example, the partnership with chat app Line in Thailand could give Citi access to more than 30 million Line users in Thailand - Line's second-largest market after Japan.

By applying data analytics to personalise content, the result is a stickier relationship with clients that is also more profitable, Mr Selvakesari added. Over the next few months, Citi will be redesigning its mobile service for its card customers, with this service due to be up and running by the end of 2018.

Citi is also rolling out its natural language chatbot on Facebook Messenger, after making its global launch in Singapore. By 2020, it is expected that 50 per cent of all searches will be made using voice-based services, with 85 per cent of all customer service interactions to be driven by chatbots, said Mr Selvakesari.

"The last mile (for banking) is different today. We need to reorganise ourselves to meet the last mile. The branch of the future is an app," said Mr Selvakesari.