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Citigroup has major plans for Dubai

DUBAI — The chairman and CEO of Citigroup's global consumer group, Ajay Banga, is a man not only with ideas and vision but, reportedly, considerable influence on the world stage. Named the second "most influential global Indian" in December 2005 after the steel magnate, Lakshmi Mittal, by the Economic Times of India, when asked why he was nominated he says: "I have no clue."

There is no doubting that Banga is well connected. Earlier in the day (he was only in Dubai for 24-hours) he was meeting with His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, to whom he expressed his commitment to the region.

"We are committed to this market. I am extremely keen in participating in the way in which Dubai is planning out its vision for 2015 and I want to be part of the growth plan. I want to be able to contribute anyway I can," he says. Whether that means establishing new branches, introducing new products or bringing new ideas to Dubai, Banga is "more than happy" to do it.

"(Dubai) is such a progressive thinking place," he says. "If you went to government and merchant bodies and offered them an idea I would be surprised if they didn't jump at it."

Citigroup, one of the world's largest financial services companies, recently signed a deal with the Singapore Mass Transit System (SMTS) and Banga is keen to bring the same idea to Dubai.

"What we are doing in Singapore, and I would love to do in the UAE, is that we have just signed a deal with the SMTS where the card passengers' swipe for their fare is a Citibank credit or debit card." The card can also be used at any retail outlet in the metro station and there's a loyalty programme attached as well, he explains. "After you use your card x number of times you get x number of rides free. That do me is different, it is innovative."

He is keen to negotiate with the operator of the Dubai Metro (the Roads and Transport Authority (RTA) to implement a similar scheme in Dubai. "I would love to be able to (negotiate with them). But I want to make sure that I can prove that it (the scheme) works," he says.

Citigroup is also trialling a biometric payment system in Singapore with 190,000 cardholders between the age of 25 and 34. Card users can take cash out of automatic teller machines (ATMs) and make payments simply by using a fingerprint. And biometric reading devices are being installed in Starbucks and other outlets, says Banga. In India, too, the bank is rolling out a network of biometric ATMs designed to embrace the illiterate poor. Eventually, this type of payment system will be introduced in Dubai but no timetable has been set.

Another initiative the bank is spearheading in the emirate is the formation of a "real credit bureau" said Banga. "If you really want to participate in the growth of 500 million people in the middle class (that's the projected number expected to enter the middle class around the world in the next five years, he says) you need credit bureaus."

The bank is working with governmental agency, Emcredit, and is contacting credit bureaus such as Experian, to help to bring this about. "We are willing to put information into the system, providing all the other banks locally contribute data, so we can all benefit from it. We are happy to take the lead," he says.

In terms of shaping products, Banga's banking philosophy is simple: "To steal shamelessly". "It is an odd phrase for a banker to use," he admits, but the aim is not to re-invent the wheel, but to leverage one of the biggest strengths of a global bank. To take an idea that has worked in other countries and see if it can be adapted it to the local circumstances, he explains.

As for delivery, he talks about the "ABC" of banking. A stands for the affluent segment — a main target for the consumer banking group; B stands for broad-basing the franchise, either through partnership programmes with airlines and retailers for example, or by using alternative channels such as the telephone and Internet; and C stands for the community and the customer.

Many of the customers to whom the products are targeted also fit into category "A" — the affluent middle class. Dubai, with its rapidly growing and upwardly mobile population, is therefore a perfect market in which Banga and his team can execute their consumer banking initiatives.

"Your aspirations for a better life for you and your family drive the middle class. And you tend to leverage yourself differently from the way you did earlier," says Banga. As the world's number one credit card provider Citigroup "probably has the biggest share (of the credit card market) in Dubai", measured by both spend and the number of cards in use, he says. Citigroup is also the largest provider of personal loans in the emirate.

Dubai's diverse population, which Banga describes as a "mosaic" because it is made up of so many sub-groups, can make targeting a particular customer segment and, more importantly, the understanding of it, tricky. There are the non-resident Indians (NRI) and Pakistani expats, the Asian, Arab and Western ex-pats as well as a much smaller local population. "The understanding of the marketplace is different from all other markets — maybe except for New York City and London. Most other cities have more locals," he says.

The Citigold and Citibusiness offerings are targeted at the "mass affluent" — a wealth management offering designed for the individual and businessperson respectively. "These businesses are growing at 20 per cent a year around the world," says Banga, and are hugely successful in Dubai. The bank is aiming to build its wealth management strategy further and make "more inroads into dealing with the local population," he says.

Recently, the bank also introduced a mortgage offering for its business customers in Dubai. Known as Property Power, which has been a big success in about 15 other countries, it allows business customers to unlock the value of their property to access working capital.

For the NRI, a hugely important customer group for the bank and one for whom Banga believes the bank is ahead of the game because of its strong reputation, it offers a bespoke package. Citigroup is the second largest NRI-services provider after the State Bank of India, explains Banga. The NRI package allows customers to meet their repatriation needs, their Indian banking needs, have access to a local dirham account, and a local credit card — "everything you need to help you settle in," he explains.

The bank wants to replicate this service for Pakistani and Egyptian customers, leveraging on its "globality to ensure that our customers feel at home here, and have a link to their home countries," says Banga.

The global ex-patriate banking service is also about to be launched in Asia and will be brought to Dubai in due course. The service will create a seamless link between Citibank accounts in different countries and there will be one account manager to handle all of them.

"I honestly believe this market (Dubai) is tailor-made for that, but you have to introduce it with a lot of care. You have to set it up well, invest in the right systems and in the right people who can link the three countries together. "It's not easy to know the banking laws of three different countries," he adds.

In line with the booming demand for Islamic banking products, Citigroup is also looking to introduce retail banking products to the Islamic customer in the Middle East. Retail banking products were launched in Malaysia four or five months ago, and "we now moving into Pakistan and Egypt, where there is a sizeable market for us," says Banga. Citigroup already owns Citi Islamic Investment Bank (CIIB) in Bahrain and is a third party distributor for some Islamic banking products.

Banga stresses the importance of delivering a value proposition. "If your product doesn't offer the right value proposition the customer won't be loyal to you," he says. Without a value proposition "you can make money for a short while but you can't make money for long", he adds.

And if a customer believes a product offers value for money, it is much easier for a financial institution to establish "sticky behaviour". Examples of such behaviour include the setting up of standing order instructions on a cheque account or using the Internet for bill payment. When this happens "the likelihood of attrition goes down by 50 per cent," says Banga. And the more products a customer has, the "attrite score" lowers significantly, he explains.

Banga is big on meeting revenue and profit goals as well as measuring performance. The metrics upon which he places a great deal of importance are: loyalty and retention; the net promoter score — "the difference between the guys who love you and those who don't" — which is also attached to loyalty and attrition; the speed of turnaround; and employee satisfaction.

"At the end of day, we have a single focus to move these scores each way. I'd be lying if I was at the top of these scores in all the markets," he confesses. "I'm not, but I'm very focused."

Why Citigroup bought Egg?

In January, Citigroup acquired the world's largest online bank, Egg Banking, from Prudential for £575 million ($1.127 billion). The acquisition, however, does not mean that an Internet-only bank will be brought to the UAE, or to anywhere else, for that matter.

"I think that bricks and clicks together is a better proposition than only the Internet," says Ajay Banga, chairman and CEO of Citigroup's global consumer group, and the man behind this major acquisition.

"I am trying to take Egg's Internet capabilities, its customer-friendly screen and customer-friendly manouevring to a number of markets around the world," he says. These are markets where Internet banking is very open and where straight through processing, from application to approval, is possible. He cites Australia, Japan, Singapore, and the US as examples of markets where the Egg model can be applied very easily. He doesn't want to move into territory, however, where the bank doesn't already have an on-the-ground presence.

"There are a bunch of markets where you need web signatures, and where you have to show up to sign [forms],' says Banga - places like India, Dubai, and Poland. In these places, "Internet banking is a little more complicated because the convenience is less. But it doesn't mean it can't be done."

He describes the purchase of Egg as a "terrific deal", and says it came about as a result of "being in the right place at the right time".

"We have a terrific relationship with the Pru. We sell a lot of their insurance products around the world through our distribution channels, so we know each another. So the conversation started from there."