Citigroup goes digital to lure affluent customers and cut costs
NEW YORK-BASED bank Citigroup Inc. is deepening its interest in Asian markets by investing more in cyber-banking services to entice the growing wealthy class in the East where consumer spending is estimated to exceed North America in 2020.
“The objective is to continue to bring consistent client-led growth to our business over the next few quarters,” Gonzalo Luchetti, who heads the Asia Pacific retail division, said in a May interview in Hong Kong to Bloomberg.
“We have to keep growing clients the way we have over the last 12 months when we started this transformation.”
Citigroup is expanding its digital-banking channels in Asia https://t.co/8aEYlbt6zF pic.twitter.com/d65JgPAPVd
— Bloomberg (@business) June 7, 2017
With an eye to grow their base by at least 10 percent this year, Citigroup has set up a gamut of new financial technologies that will make it easier for customers to link up with wealth managers across borders, as well as make payments via its digital and mobile platforms.
Citigroup is one of many banks including Standard Chartered Plc. and HSBC Holdings Plc. who are charting new ways forward in order to remain relevant in the rapidly changing financial landscape where startups and technology companies have proven to be particularly disruptive. Players such as TransferWise and Square have wreaked havoc on the perception banks will forever be the traditional gatekeepers of the financial world.
Transferwise revolutionized the remittance industry by charging low fees and speeding up the process, while Square has made card-payments more accessible for SMEs. As such, banks such as Citigroup are now turning to niche markets – such as wealth management, investment management and cross-border banking – in order to protect their bottom lines where startups are largely uninterested in.
SEE ALSO: TransferWise begins operations in Singapore, signals pivot to Asia
The bank’s’ emphasis on their more affluent members is important—Citigroup’s Asia Pacific retail division reports about 400,000 rich clients in Asia itself, with portfolios beginning at US$100,000 and topping US$10 million, according to Luchetti.
The adoption of new technologies will hopefully save clients more money through low-cost digital channels. Luchetti noted more than 90 percent of the bank’s transactions now take place through self-services channels.
“The clients are voting with their feet,” he said to Bloomberg. “We’re following our clients in that regard.”
As a result of this mini digital revolution, the number of physical Citigroup banks in Asia have fallen across the board, and it’s a taste of what Luchetti expects will be a “long-term trend” in global banking. Eleven percent of Asian banks have closed in the last year, despite the fact the average deposits increased by six percent.
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