Citibank launches initiative to build b-to-b e-commerce sites

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Citibank is rolling out a major global initiative to build and host transactional e-commerce sites for its business customers, and plans to start building industry-specific portals next year.

The New York-based financial services juggernaut, which operates in more than 100 countries, has been approaching companies throughout Asia and Europe, and next year will begin pitching companies in the U.S. and Latin America.

It is the first bank to enter the b-to-b site development and hosting marketplace, which has been the almost-exclusive domain of technology companies. Citibank parent Citigroup is the largest bank in the U.S., with about $668 billion in assets.

With this Web initiative, Citibank will offer its 2,300 worldwide business customers assistance in establishing transactional, Citibank server-hosted Web sites. Citibank will manage the back-end financial systems for sales generated through the Net venues.

Its planned portal sites, which could include such industry breakouts as chemicals, would give common Web homes to Citibank's business clients and ultimately allow these clients' customers to order products and make payments online, said Denise McLaughlin, VP-commerce-enabling solutions and one of the program's chiefs.

Citibank is steering its Net pitch to business customers in fields such as chemicals, consumer products and pharmaceuticals.

The company's turnkey e-commerce package, called Citibank Commerce, allows business users to check product availability, order items and make payments. It can be tied in with a company's existing systems.

The bank is also establishing call centers to assist business customers with the program.

The Internet effort is a play by the company to integrate its traditional banking, cash management and treasury services into the booming b-to-b banking, cash management and treasury services into the booming b-to-b e-commerce field, Ms. McLaughlin said.

Marc Kramer, president of e-commerce strategy consulting firm Kramer Communications, Downington, Pa., said: "No bank's done this. Citibank is creating [an e-commerce] community. And if a bank creates a community, it owns the customers."

By leveraging its existing financial relationships with business customers, Citibank is looking to muscle in on the b-to-b e-commerce-building space traditionally occupied by high-tech companies such as Microsoft Corp.

Citibank believes it has an advantage over technology companies in this arena because it has established financial relationships with the companies it will be approaching, Ms. McLaughlin said.

Microsoft is not in direct competition with Citibank in regard to Citibank's e-commerce initiative, said John Grispon, Microsoft's worldwide banking manager.

One of the objectives of the Redmond, Wash.-based company is to assist financial institutions such as Citibank in setting up Internet-based projects, not to handle back-end financial transactions, as the bank is doing in this case.

Microsoft has worked with Citibank on previous e-commerce initiatives, though not this one, Mr. Grispon said.

Ms. McLaughlin said Citibank is also working with outside vendors in ramping up its Net program.

Pricing factors

Citibank will negotiate pricing packages with its business customers based on such factors as volume and degree of site integration, said Michael Guralnick, region head-sales and marketing, Citibank Global Cash & Trade. He did not provide specific prices. Citibank literature regarding Citibank Commerce states that site hosting and access costs are in the $50,000 range.

Weber Lee, regional treasurer at Dupont Singapore, one of Citibank's first customers in the Net program, said Citibank has been able to tie in its existing financial relationship with Dupont to the new e-commerce program. The bank is helping Dupont Singapore establish an engineering polymers site.

"Dupont went with [Citibank] because of its [Internet] payment features," Mr. Weber said.

"Our business-to-business language is comfortable to our customers," Ms. McLaughlin said, adding that technology companies can have trouble speaking in the straightforward financial terms that businesses understand.

Citibank began rolling out Citibank Commerce several months ago in Singapore, and has recently begun marketing to companies in Australia, Hong Kong, the Philippines, Thailand and parts of Europe. The bank's business customers throughout the key U.S. and Latin American markets will be approached next.

Aside from one-on-one sales calls, the bank has begun advertising the Web program in Asia-geared publications, including The Asian Wall Street Journal, which reaches readers throughout Asia, and The South China Morning Post in Hong Kong.

The idea is to get the broadest b-to-b marketing reach possible throughout Asia through a mixture of regional and local newspapers, said Arjun Chandrasekhar, Citibank's Singapore-based Asia-Pacific marketing director.

Planning for the Americas marketing push is in the early stages.

Ms. McLaughlin said Citibank decided to begin its b-to-b e-commerce push in Singapore, in part because the country and its businesses are aggressive when it comes to being open to Net-related ven -- tures.

Bankers familiar with Singapore noted that the city-state is highly wired and has a lot of multinational corporate headquarters, making it a natural pilot city for the program.

Potential land mines

Citibank's road into the e-commerce-building space, however, is not without potential land mines, said Cliff Condon, director of research at Forrester BV, Forrester Research's Amsterdam-based European division.

"How much can Citi concentrate on technologies while still providing its core [b-to-b] financial services as a bank?" he said.

Kate Graham, Sanwa Bank California's VP-alternative delivery, said Citibank will likely be able to handle the work involved in its leap into the e-commerce fray by relying on its established financial ties to keep b-to-b relationships strong.

"The bank is a trusted vendor," Ms. Graham said. "It's been handling global [b-to-b finance] for eons."

Sanwa Bank California is the U.S. arm of Osaka-based banking giant Sanwa Bank Ltd. Ms. Graham could not comment on whether the bank is considering a program similar to Citibank's.

Citibank does not have a corner on the b-to-b Web development marketplace among financial services companies. Charlotte, N.C.-based Bank of America Corp., the No. 2 bank in the U.S. with about $618 billion in assets, is piloting a program that allows its U.S. business customers to let their clients pay bills over the Internet, said Ken Wood, senior VP-manager of e-commerce.

It plans to expand the program, called Web Enablement, next year to Europe, Asia and Latin America.

Bank of America has no plans to help customers set up e-commerce sites because it has not had a demand for such service, Mr. Wood said, adding that most b-to-b customer requests have centered on electronic payments. In all cases, the e-payments function off Bank of America's servers.

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