Digital retail banking levels the playing field, says Citi

Singapore

THE increasing shift towards digital retail banking has evened out the competition for customer reach in Singapore, with branch-light banks such as Citi being able to play "like never before", a senior executive at Citi has said.

"Traditionally, it's the local banks that have got all the branches and networks that have the upper hand," said Charles Wong, Citibank Singapore's head of retail banking, in an interview with The Business Times.

"But this (digital banking) has kind of evened the playing field for us because today, customers are online. We are no longer relying on having the number of branches to reach out to them, especially in a market like Singapore."

Citi has closed hundreds of branches in Asia in recent years, shrinking its network from 600 to roughly 250, Reuters reported recently.

In Singapore, the bank last year further cut its physical branches - comprising instant-banking and full-service ones - from 18 to 15.

But even amid this downsizing of it physical network, Citi, like its competitors, has been spending heavily on digital initiatives. The retail bank's investment in technology in Singapore grew by close to 40 per cent between 2016 and last year.

Last November, the bank revamped its Citi Mobile app, giving it a cleaner user interface and new features like a multi-currency wallet that offers fee-free withdrawals from Citi ATMs worldwide. It also rolled out a virtual remote engagement feature in October for Singapore clients to speak with relationship managers on demand using screen sharing and video capabilities.

The aim is to enable all branch transactions to be carried out on the mobile app within the next two to three years. The bank is also targeting to enable customers to open accounts with the bank digitally in the third quarter of this year.

Citi's bets on its retail banking business in Singapore appear to be paying off.

Its first-quarter revenue this year was up about 10 per cent from a year ago, even as its physical branches have been cut back.

Digital acquisitions of retail banking customers grew 20 per cent in Q1 from the year-ago quarter. The bank did not reveal the base figures but Mr Wong said it was a "significant pickup".

"In terms of how we generate interest and leads in the digital world through digital partners, versus generating leads through the traditional marketing channels, that has come up significantly as well," he added.

Citi is not the only one ramping up its digital offerings while streamlining its branch network: the local banks have caught on to the idea too.

Mr Wong acknowledged it himself: "You'll see that in terms of branch network, there's a trend across all banks; we are all rationalising our branch footprint."

However, he is wagering that their extensive branch networks will become burdensome.

"We do not have an inherent network of branches which the local banks need to deal with. Today, like it or not, each time you move or close a branch, it poses a challenge," he said. "That allows us to move customers to the digital platform faster."

And as digital offerings become "hygiene", or the norm, Citi will continue to make digital investments in its retail business even if they aren't immediately profitable.

The bank declined to disclose figures but Mr Wong proffered: "I'll put it as the cost of doing business. I think banks have gone past looking at it as cost saving. ... Rather, it should be part of the customer value proposition you offer."

"At least for the next five to 10 years, you'll see that investment will continue to be a key part," he added. "Each time you introduce a new feature or technology, you spend the money and that needs to mature over a period of time before the cost comes down."