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Citibank SWOT Analysis

Citigroup SWOT Analysis

2015 was an year of major changes for the Citigroup.  The company went through a transformation to emerge in a simpler, stronger and safer new form.  Since 2006, 2015 was also the best year in terms of net income for the finance brand which crossed $17 billion in net income. Citi has undergone a big change from what it was a decade ago.  The company has greatly reduced its headcount and changed its business mix dramatically.  Citi has several other achievements too to its name. It is also the industry leader in terms of credit cards with more than 140 million accounts globally.  Its Global consumer bank serves as a trusted partner to more than 110 million customers in 19 countries worldwide.  Citi and Costco have partnered to increase consumer engagement.

The brand also a signed a partnership with the Australian Supermarket brand Coles.  Apart from that, its partnership with Home Depot continues happily. The brand has also accelerated its move towards digitization. It has partnered several retail brands and also earned several rewards internationally for its excellent service in several regions of the world. This is a SWOT analysis highlighting the strengths, weaknesses, opportunities and threats before Citigroup.

CITIBANK SWOT ANALYSIS

Strengths:

 

 

  • Strong financial position – Citi’s financial performance has been good and in this regard, 2015 has been it best year when it made more than $17 billion. However, compared to 2016, revenue declined slightly in 2016 to reach $15 billion.
  • Established brand image – Over the years, the brand has built a strong image based on its excellent service and the large gamut of services. Euromoney has recognized Citi with several awards including one for being the best investment bank in several of the emerging markets.
  • Leading credit card issuer globally – The brand is a leading issuer of credit cards globally. Citi is also the undisputed leader globally in terms of credit cards. Globally, it has more than 140 million accounts, $421 billion in annual purchase sales and $140 billion in average receivables across Citi Branded Cards and Citi Retail Services.
  • Partnership with several retail brands – the brand’s partnership with several retail brands globally continues. Some of the key names that Citi works in partnership with are Best Buy, Exxon and Mobil, Macy’s, Sears, Shell and The Home Depot. It has a three decade long partnership with American Airlines and in 2017 it has renewed its partnership with Home Depot.
  • Large customer base – the large customer base of Citibank is another key strength of Ctibank. The brand provides a large range of services which include checking and savings accounts, loans, wealth management advice and small business services. Its Global consumer bank serves as reliable partner to more than 110 million customers in 19 countries across the globe. It also makes the brand a driver of economic growth and progress throughout the world.  The brand is a well known name in the world of financial services.
  • Fast growth in Asian markets – Asia is one of the three priority markets for Citibank which is seeing fast growth there. It has entered into promising partnership with some important brands in Asia. Some of the key partnerships, it has struck in Asia include ride-hailing platform Grab, hospitality pioneer Airbnb and Lazada Group, a leading online shopping and selling site.
  • Strong Focus on sustainability and CSR: Citi has started a 10 year $100 billion initiative named Sustainable progress Initiative dedicated to financing solutions that produce low emissions. It also increased its lending to small businesses in US to more than $11 billion. Its pioneering pathways opportunities is focused at connecting more people in US with better kills, better jobs and better career opportunities.
  • Heavy focus on digitization: The brand has made notable improvement in digitization of the key components of its mobile payments experience. It also announced its own payments solution to provide customers with a simple and fast option for online, in-app and in store payment needs.

Weaknesses:

 

  • Overdependence on US and Mexico – Citibank has slimmed its business in several markets to retain its focus on three key markets. In 2016, to make its business run more efficiently and for the more efficient allocation f resources, the financial brand announced its intention o exit Argentina, Brazil and Colombia.  In the past few years it has reduced its headcount by more than 28000 as well assets by more than $130 billion and legal entities too by around one third.
  • Tainted image due to FIFA corruption scandal and allegations of money laundering – In May, 2017, the bank agreed to pay $97.4 million in a settlement after a long investigation into Banamex US. Citibank acquired Banamex one of the largest banks in Mexico in 2001. Banamex USA dominated the bank transfers from US to Mexico. Several flags were raised internally over suspicious transfers, however very little investigation was done. At last the Justice department was forced to press charges since a lot of drug money and other illicit funds had infiltrated its systems. In the FIFA case too, the brand was issued a subpoena. After Citibank having agreed to pay the fine, the Justice Department will not file any criminal charges against it in connection with a lack of adequate oversight of Banamex US.

Opportunities:

 

  • Increased presence in key global economies including the Asian markets – Citibank is present in 19 countries. However, globally several economies are growing very fast which means a world of opportunities for the bank.
  • Increased opportunities outside US to reduce its dependence on the two core markets – If Citibank focuses on increasing its presence outside US in the coming years, then it will reduce its dependence on the US markets.
  • Partner with more retail brands – Citibank has partnered with several retail brands including Costco, Home Depot and the Australian brand Coles.
  • Opportunities in CSR and sustainability – The brand also places focus on CSR and sustainability. This is an important area where the brand can use its financial clout and global presence to contribute to society’s growth and community’s development.

Threats:

 

  • Legal and political framework – The legal and regulatory concerns are a primary risk factor for Citi’s business. Both inside US and outside it ongoing regulatory changes can be a major risk factor for Citi. Such areas are numerous and changes in these areas may require Citi to adapt immediately which becomes a major cost factor too. It affects not just long term business, but also the balance sheet and budget planning. This is a major area of risk for all the financial institutions and it is why also a major worry. Globally, the regulation and oversight of financial institutions has grown and it affects them financially.
  • Competition – Competition is another important risk factor for Citibank. The number of credit card issuing banks has grown globally. In Asia and US too their number has grown very fast. This means higher competitive pressure on Citi and a need for faster innovation.
  • Uncertainties arising out of Brexit – Britain’s decision to leave EU has given rise to severe uncertainties which can affect Citi’s business.  There is an uncertainty over the potential impact of Britain’s Exit in the UK market and overall Europe. This might need Britain to make changes to its overall business strategy in these markets.
  • Increased compliance and regulatory risks in the emerging markets – In the emerging Asian markets, there are deeper regulatory and compliance related risks for the brand. China is already well known for the level of Red Tape. India too is not far behind and for a financial institution trying to strengthen its presence in these markets going might get a bit tough.

 

Conclusion:

In the recent years, Citi has taken some major steps towards making its business leaner, smarter, stronger and safer.  While it has limited its focus to the main markets where it operates, it has also accelerated its digitization move. Apart from being the largest credit card issuer in the world, the brand is also recognized for several other factors. Its main focus is now on US, Asia and Mexico. It has partnered several retail brands and is working to build more partnerships.  It has also struck an important and valuable partnership with Paypal. However, the brand’s image was tainted in FIFA scandal case and it agreed to pay a hefty fine in relation to the lack of oversight of Banamex US. Still, there are major opportunities awaiting Citibank in the Asian markets and across key emerging economies.

Sources:

https://www.citigroup.com/citi/investor/quarterly/2017/annual-report/

https://www.citigroup.com/citi/investor/quarterly/2017/ar16_en.pdf?ieNocache=271

https://www.citigroup.com/citi/investor/quarterly/2017/ar17p.pdf?ieNocache=271

https://www.citigroup.com/citi/investor/quarterly/2016/ar15c_en.pdf

https://www.forbes.com/sites/francescoppola/2016/03/02/citigroups-involvement-in-the-fifa-corruption-case-signals-trouble-ahead/#1b7b36fc489a

https://www.nytimes.com/2017/05/22/business/dealbook/citigroup-settlement-banamex-usa-inquiry.html

 

Written by Abhijeet Pratap

Abhijeet has been blogging on educational topics and business research since 2016. He graduated with a Hons. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers.

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