Citi eyes mobile-only banking

US-BASED global banking giant Citi is moving aggressively to weave products and services into the digital space while bracing for a future where mobile devices will be the predominant banking channel.

In the Philippines, about 40 percent of clients have migrated to various digital banking platforms and the goal is to double the ratio in the next three years, Citi Philippines managing director and consumer banking head Bea Teh-Tan said in a briefing Wednesday.

New York-based Heather Cox—Citi’s chief of client experience, digital and marketing officer for global consumer banking—said the advent of Apple’s iPhone 10 years ago was a major game-changer. This was because anyone with access to “API”—short for application program interface or a set of routines, protocols, and tools for building software applications—could now create new applications or apps and make them available to consumers across the globe. This has given birth to millions of new apps in the last eight years and was heightened by the proliferation of other smart phones running on android systems.

There are five billion adults in the world today, three billion have mobile devices, of which two billion are smart phones. In the next two years, there will be about three billion smart phone users, Cox said.

A truly mobile-only start-up institution, Cox said, would never design services to push people to transact at branches or call their banks. She said services would be designed in such a way that everything could be done with the touch of fingertips, which means products and services would have to be radically simplified and human connection would be minimized.

“The game has changed for us,” Cox said, noting that in the past three years, banking was started to be influenced by all sorts of industries that had nothing to do with banking.

She noted how Microsoft founder Bill Gates had said 20 years ago that “people need banking but don’t necessarily need banks.”

Five years ago, she noted that financial technology (fintech) start-ups generated about $5 billion in investments. Last year, she said, the number had grown to $12 billion and it was projected to surge to $20 billion this year. “That’s pure innovation going into our space,” she said.

In the US, she said about $15 billion worth of loan origination this year had been done on a non-bank peer-to-peer lending platform. She noted: “$15B is a whole lot of loans for us bankers and that’s from someone who wasn’t even in the landscape 10 years ago. They (fintech start-ups) are not the small fry anymore and really taking critical market share,” she said.

But instead of being intimidated by this huge amount of disruption in the banking industry, Cox said it had motivated Citi to harness this open access to hundreds of thousands of developers. “If we provide them the right platform, they can drive innovation on our behalf,” she said.

“We like to build things ourselves but there are some things that we need to bring outside innovation to us,” she said, noting that the idea would be to bring the “best of Citi and the best of fintech on one eco-system.”

As such, while Citi is building its internal capability to compete in this mobile digital space, the bank has launched a global competition that seeks to pick the brains of the best in technology space to foster digital and mobile innovation in banking.

The bank recently launched Citi Mobile Challenge, a next-generation accelerator that combined a virtual hackathon with an incubator, a worldwide network of FinTech experts and Citi’s global sponsors and clients to discover solutions across more than 100 markets. Developers from Asia-Pacific and around the world are invited to build innovative solutions capable of running on Citi’s digital platform globally.

Registration for the challenge began on Aug. 19, and selected participants will demonstrate their concepts at events in Bangalore, Hong Kong, Singapore and Sydney. About 1,900 participants in Asia-Pacific have so far registered for this global challenge.