E-Biz Trends In Banking

Journal of Internet Banking and Commerce

An open access Internet journal (http://www.arraydev.com/commerce/jibc/)

Journal of Internet Banking and Commerce, April 2007, vol. 12, no.1 (http://www.arraydev.com/commerce/jibc/)

E-Business Strategy in an Online Banking Services: A Case Study

Author's Name: Abdullah S. Al-Mudimigh

Author's Title/Affiliation: Assistant Professor

Postal Address: Department of Information Systems, College of Computer & Information Sciences, King Saud University, Riyadh 11543, P O Box 51178, Saudi Arabia

Author's Personal/Organizational Website: www.ccis.ksu.edu.sa

E-mail :mudimigh(at)ccis.ksu.edu.sa

Brief Biographic Description: Chairman, Information Systems Department, College of Computer & Information Sciences, King Saud University, Riyadh, Saudi Arabia. His research interests are in the areas of enterprise systems (ES), e-business, strategic information system planning, and customer relationship management (CRM).

Abstract

Banks today are aware of both the threat and the opportunity that the Web represents. No traditional bank would dare face investment analysts without an Internet strategy. But even a detailed and thoughtful approach to the Web does not guarantee business success. The main purpose behind the launching of online banking services is to provide the customers with an alternative, more responsive and with less expensive options. With options just a click away, customers have more control than ever. They expect real-time answers and superior usability. They also want personal attention and highly customized products and services. The focus of e-business must always be on the customer. On the other hand, the technology and the business structure follow on form of the value you intend to provide to the customer.

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This paper evaluates the success of the e-business model and e-business strategy implemented by Citibank in the United Arab Emirates in offering its retail Internet Banking Service; Citibank Online.

Keywords: Electronic Banking, Online Banking, Retail Banking, Internet Usage

© Dr. Abdullah S. Al-Mudimigh, 2007

Introduction

E-business relies on the development of new business strategies based on networks. The world has become increasingly inter-connected via telecommunication networks and computers. These offer fast, flexible, and cost-effective ways of doing business.

The Internet is driving the new economy by creating unprecedented opportunities for countries, companies and individuals around the world. CEOs worldwide recognize the strategic role that the Internet plays in their company's ability to survive and compete in the future. To be competitive in the Internet economy, companies need to harness the power of the Internet successfully.

Citibank UAE - Background Information

Citibank is a subsidiary of Citigroup, a strong financial brand with more than 100 million customers, 5.9 million online relationships and a global reach spanning 100 countries.

Citibank UAE started its retail business in 1987 in a very highly competitive environment offering a comprehensive line of high quality financial services targeted to the affluent and middle income segments. Citibank has been perceived, as at the edge of innovation leveraging its global expertise, it was the first bank in the UAE to introduce innovative e-business solutions like:

1) CitiPhone - 24 hour Phone Banking Service

2) ATMs- Automated Teller Machines

3) CitiAlert - GSM notifications service

4) E-Card - Internet Shopping Card

5) CitiDirect - Corporate Internet Banking Service, and

6) Citibank Online - Retail Internet Banking Service.

In the year 2000, Citibank had 160,000 retail customers serviced mainly through five branches, six ATMs and CitiPhone. Given the Central Bank restrictions on opening additional branches, being a foreign bank, the banks' e-business strategy was to focus on remote channels of distribution, mainly Internet Banking solutions.

Ms. Sarah Hussain, Web Administrator at Citibank says, "Given the kind of Internet explosion which the market is going through, Internet is the channel of the future, it is

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critical for Citibank to leverage this channel aggressively and gain an early and dominant leadership".

What encouraged Citibank to proceed with its investment in this direction is the tremendous growth of Internet usage since its introduction in 1996. According to Etisalat, the only Internet Service Provider in the UAE, in 2003 the number of Internet users was 1,105,000 in a country with a population of 3.7 million, this number is fairly high and expected to increase even further.

Table 1 shows the number of Internet users in some of the Arab countries for 2003 as obtained from Etisalat:

Table 1: Number of Internet users in some of the Arab countries (Etisalat, 2003)

Country

Population

Internet Users

Internet Users as

% of Population

Mobile Phones users

Mobile Phones users as % of Population

UAE

3,700,000

1,105,000

30%

2,655,000

72%

Qatar

805,000

75,400

9%

328,000

41%

Bahrain

728,000

174,800

24%

400,000

55%

...