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HEARTLAND PUSH: In December last year, Citibank's Mr Larsen and SMRT president and chief executive Saw Phaik Hwa announced a deal in which the bank would open branches and place ATMs all along SMRT's train lines. Citibank also launched a new credit card that allows users to redeem free train rides. The gamble has paid off, it seems: About 80,000 new customer accounts have been opened in the past six months. -- LIANHE ZAOBAO FILE PHOTO
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LESS than four years ago, Citibank was just like any other foreign retail bank in Singapore.
It had just four branches - mostly in monied areas such as Orchard Road and Raffles Place - where its staff attended to the needs of a largely well-heeled clientele.
If you were a Citibank customer and needed to withdraw cash, you would find that the bank's automated teller machines (ATMs) were to be found only at its branches. The only 'off-site' ATM not situated in a branch was in Tampines.
As was the case with most other foreign banks in Singapore, Citibank's consumer business was 'polarised', meaning that it focused on the affluent customer segment through its CitiGold offering, and that its mass market reach amounted to only one or two products per customer, such as a credit card or car loan.
To the average man in the street who dealt mainly with Singapore's three local banks - DBS Bank, United Overseas Bank and OCBC Bank - a savings account with a bank like Citibank seemed a posh proposition that was well out of his reach.
Now, one common refrain that Citibank Singapore's country manager, Mr Jonathan Larsen, hears from customers is: 'I never thought I'd be doing business with your bank!'
This might not sound like fervent fan-mail, but Mr Larsen still views the feedback as 'a great compliment' because he sees it as a clear endorsement of Citibank's new strategy of winning the hearts and minds of ordinary Singaporeans.
'Singaporeans have been telling us how surprised they are to see Citi in their neighbourhood, when they walk into our branches in Tiong Bahru or Bedok to open new accounts,' he chuckles, during an interview with The Straits Times last Thursday.
Multi-flank charge
CITI'S four-year charge into the heartlands has been impressive. And the American bank has taken the fight to its three local rivals in two main ways.
The first is enlarging its distribution network of branches and ATMs. In 2005, it increased its four branches to nine and added off-site ATMs at strategic points all over the island.
Then, it teamed up with four other foreign banks - Standard Chartered, Maybank, HSBC and ABN-Amro - in an ATM pooling arrangement that gave customers of all five banks shared access to a network of about 140 machines.
But in December last year, Citi revealed its most aggressive heartland strategy yet. It partnered public transport operator SMRT in a deal that will see it open branches and place ATMs all along SMRT's train lines.
It also launched a new credit card that allows users to redeem free train rides.
The gamble has paid off, it seems: About 80,000 new customer accounts have been opened in the past six months.
A second key plank of the strategy has been to target Singaporeans by offering new savings account products.
Most Singaporeans have their monthly salaries credited automatically into their savings accounts, usually opened with a local bank. They tend to also pay their bills from these accounts.
To break this traditional tie to the local banks, Citi enticed thousands into switching their salary accounts out of the local banks and taking up its 'Step-Up Interest Account', which offers customers an annual rate of 0.6875 per cent when they start saving with the bank.
It went on company roadshows to promote its product and pledged to place ATMs within company premises to increase the convenience factor.
As a result of these efforts, the bank has achieved 'more roundedness and depth in our customer relationships', said Mr Larsen.
Citibank's customers now have an average of three accounts with the bank, and a Citigold customer has 5.5 accounts, including multiple time deposits.
Citibank's 'unaided brand awareness' - the percentage of Singaporeans who recognise its brand name without being prompted - rose from 27 per cent in the first quarter of 2005 to 59 per cent in April this year.
Still, this recent local push is relatively new to Citibank, which has been in Singapore for more than a century. What sparked off this 'chain of exciting developments' in 2005?
Behind the new focus
MR LARSEN points to the support given by Citi's top management.
As margins were very low in places such as Singapore, Citi decided that the way forward was to build up business volume. And that meant beefing up distribution channels such as branches and ATMs.
'In the last few years, our chief executive Chuck Prince and top executives have emphasised the strategy of distribution growth, and we are prepared to make substantial investments in a systematic way to achieve this,' said Mr Larsen.
'This became the catalyst for us to rethink our approach in Singapore, which was one of the Asian markets we decided to focus on.'
It was also timely that on Jan 1, 2005, the free trade agreement (FTA) between the United States and Singapore came into effect, allowing the bank to open as many branches in the Republic as it wanted.
'The FTA was instrumental and important in our expansion here - we couldn't have done the SMRT partnership without it. So you can say the stars were aligned to make it logical and appealing for Citibank to renew its commitment to Singapore.'
Citibank appears unfazed by the potential costs of servicing smaller, low-margin accounts that even local banks have baulked at and slapped service charges on.
'We have a differentiated strategy for each segment to be as cost-efficient as possible. We'll create value for all customers, and revenues and market share will take care of themselves,' said Mr Larsen, pointing out that Citi Singapore has been consistently profitable.
But 'going local' is easier said than done.
How does a foreign bank like Citibank show it understands the needs of Singaporeans?
Mr Larsen, who became country head of Citibank Singapore in May 2005, acknowledged that his own familiarity with the Singaporean psyche helped him steer the expansion effort.
An Australian, he and his family have lived in Singapore for 12 years - his son even speaks 'perfect Singlish'.
Mr Larsen himself is said to have diligently perfected the pronunciation of local names such as 'Bedok' and 'Ang Mo Kio', and has been frequently spotted by competitors checking out their heartlands branches.
Instant service
OBSERVING that one thing Singaporeans seem to get irritated with queuing at branches, Mr Larsen focused squarely on fixing that.
So a key theme in Citi's value proposition to Singaporeans is getting things done instantly.
The bank was the first to launch instant approval of credit cards, instant account opening, in-principle approval of online mortgage applications within 60 seconds and instant cash via a phone call for its Ready Credit customers.
Driving home his point, Mr Larsen points to a special computer terminal at his desk that is dedicated to monitoring how many seconds elapse before the bank picks up a customer's call.
The current average is 8.9 seconds and Citibank is trying to bring this down to seven seconds.
'We have 20,000 to 25,000 calls every day. If I look at the monitor and see that any call is taking too long, I call up the manager to ask why,' he says.
Personal touch
ANOTHER cardinal rule for Citi is the personal touch: 'Singaporeans also appreciate directness and informality - the ministers often don't wear a tie - so we make it a rule that everyone from top management down, including myself, calls customers personally to get feedback every week,' he observed.
This mantra of 'Making Each Interaction Personal' is actually on Citi's list of 15 'Customer First' values, which is disseminated to all its staff.
Every morning, one value is religiously pondered during 15-minute group discussions that Mr Larsen dubs the 'Daily Huddle'.
'It's rather touchy-feely, and you may say it seems a bit like communist propaganda, but we think it's highly important that the whole organisation is very clear about our values and translating them into action,' he also said.
This 'superior service' is Citibank's weapon in maintaining its lead in Singapore, he says.
And the challenge now is to 'grow even more', said Mr Larsen.
'We are looking at other ways to expand distribution, and we will keep adding new touchpoints until we run out of customers,' he said.
graceng@sph.com.sg
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