Six high level Citicorp hires in less than two years, primarily on the retail side of the institution. Three from packaged goods and services; one from an upstart British branchless bank; one from the entertainment world; and one from cyberspace. Not a traditional banker among them.

The January 1996 arrival of William I. Campbell, a rare outsider at the time, sparked the latest round of Citicorp's periodic-and notorious- reorganizations. The former Philip Morris USA chairman was promoted to executive vice president, head of global retail banking, including credit cards, in April 1997. The latest addition to this eclectic team is Stephen Liguori, who became New York retail head last month fresh from the CEO slot at Mother's Cake and Cookie Company, Oakland, CA.

It's enough to make industry rivals and analysts alike wonder what plan the retail giant has in mind for the future, and whether it will fly.

In contrast with nearly disastrous early efforts some two decades ago, today Citi and other banks are raiding consumer goods executive suites for creative perspective, with no blood let to date. So far, broader risk controls and technology have insulated banks from the inherent dangers in such cross-pollination, according to industry professionals.

thinking big-worldwide

Yet like the much anticipated coming of the market correction, Citi's strategy is a ripe arena for conjecture. The bank is the second largest in the United States, with the potential for its consumer bank to be global in scope. Described as an eclectic thinker, chairman and CEO John Shepard Reed seems to be equal parts brave and restless; he has left traces of his (r)evolutionary thinking in abruptly discarded grand plans, and executives, by the wayside on a regular basis for years (Some departures, such as that of president Richard S. Braddock in 1992, remain unexplained.). Adding to the mystique, Reed is historically press-shy. Citi officials declined to be interviewed for this article.

Industry experts analyzing Reed's strategy cite current industry concerns: brand recognition, segmentation, and technology. Yet questions remain: What is the message? Is the medium the message? And, finally, will the message be the same tomorrow?

Everyone agrees that Reed thinks big. Citi is the only global bank of the U.S. franchises, and Reed arguably believes that a global brand name is important to the success of financial institutions, according to Robert B. Harmon, banking partner, Deloitte & Touche Consulting Group. Unlike other banks, but like Charles Schwab and other nonbank competitors, Reed envisions a global franchise where Citicorp has the same sort of worldwide clout as American Express. "When you go around the world, (he wants you to see) the corner Citi office, along with the Amex office, and FedEx. "Reed wants a global can tell by the (uniform) look, feel of the bank, the colors, and the kind of services it offers." FedEx is the former corporate home of Citicorp evp for global operations and technology Mary Alice Taylor, who reports to Reed.

Citi already has a formidable overseas presence, an impressive bank network in 100 countries and some 80 emerging markets, where it is positioning itself as the provider of electronic banking services to corporate customers. And as U.S. companies become global to grow, Citi wants to become their global partner.

It makes sense to select people with strong global brand management experience, who have assimilated a lot of cultures and businesses to make their business work, says Chris Formant, chairman of the national banking industry group at Coopers & Lybrand, LLP. "Citi is trying to thoughtfully move (its) culture toward a well-managed global brand," he says. "Federal Express is legendary in its logistical prowess. Whether you move products or information, the management process is very similar," he says.

driving the "Brand" wagon

With everyone piling on the "brand" wagon, retail specialists who know how to develop it are in great demand. The question of how to cultivate a brand name in a business which is essentially a commodity one remains, however, according to Tanya Azarchs, director in financial institutions at Standard & Poor's Rating Services. "It is hard to think how people would buy a brand name checking account," she says. But today's consolidated institutions, with broader geographical reach, may bring the first opportunity to build a brand, using nationwide television campaigns to leverage the knowledge that people buy the product worldwide, for instance.

Segmentation is key to making a brand work, and consumer product companies are adept at this, too. "In the 1920s, Fords were all black and all the same," says Harmon. "Over time, the company created options and the opportunity for consumers to pick what they wanted. Citi understands this, and that those who understand the branding and segmentation of the market will be winners."

The familiar "marketing financial services like toothpaste" analogy is not totally cavity-free. To begin with, even basic financial products and services are more complex than manufactured goods, where the connection between buyer and seller stops at the cash register. Some say a subtle set of variables make it more complex, but not impossible, to measure profitability in similar terms.

Others hold that over-segmentation to a fickle marketplace can backfire. One must balance the degree of segmentation and cost effectiveness. Home banking is a case in point, according to Seamus McMahon, managing vice president of First Manhattan Consulting Group. "Twenty years ago, banks put a lot of money into it, went into the market, and said, 'Here it is,' but the price was not (feasible for consumers)," he says.

The analogy points to a more basic flaw in bank thinking, according to one long-time industry insider who spoke on the condition of anonymity. He says that banks in general are woefully behind in the use of market research. But even beyond marketing, banks must create products that impel the customer to buy. The most successful retailers, such as Nordstrom's and Wal-Mart, have "organizing concepts," usually based on merchandising, that validate them. Citi is searching for an appropriate organizing concept that dominates everything the company does, to motivate it in each market.

Consumers of financial services are in a unique situation in that they are making life decisions. The heart of financial services lies in consumers taking risks; the biggest problem in enacting the Citi (or any bank) plan is the scarcity of consumer products experts fully aware of what that means.

Yet Citi had the insight to colonize top FedEx talent, and FedEx motivates against customer anxiety: Will it get delivered? Did it get delivered? Where is the package? Sources laud Citi's decision to bring in someone from a business in which allaying anxiety plays such a major part. Also, success in banking requires organizing infinite amounts of detail, and enormous attention to detail, which brings quality control, is what dispels the customer anxiety at FedEx.

No matter how widely or deeply "customer-centered" a bank may be in spirit, technology is the backbone that makes it work, and consumers will judge banks along those lines. Customers do not separate financial services from the manner in which they are delivered. In other words, the medium is the message, and these days both are increasingly electronic.

Citi is making a pure electronic play to provide an electronic financial community, according to Gary Meshell, director of electronic financial services, Price Waterhouse. "Citicorp is playing a major game of catch-up electronically to leapfrog every other major bank... focused on the belief that the Internet presents new opportunities to be distribution and content providers," he says.

Meshell adds that Citi executive vice president of advanced development and new products Edward D. Horowitz was the first to understand and take a run at Microsoft and America OnLine as the new competition for banks. The former senior vice president of technology and CEO of interactive media at Viacom reports to Reed.

The global village which Horowitz anticipates is populated with consumers who want one-to-one marketing with someone who understands them and their financial services needs. Citi wants to be that intermediary as they move beyond simple bank products to financial planning, according to Meshell.

casting a wider electronic net

Making a major bet that the Internet will become the dominant channel for remote banking, Citi wants to provide interactive, online advice via chat rooms and forums. Eventually the bank's Web site will accommodate content in other areas through an exclusive, long-range retrieval services agreement with the Mining Company, as well as transaction processing. "If I want to buy (something online), why not go to Citi, where I have my credit card and checking accounts, and let it manage the transaction? Right now the Web is a mess. Citi wants to be a traffic cop," he says.

If serious about providing content, the notoriously proprietary Citi will have to become more open-minded about Web site window shoppers. Sources close to the situation say that the bank is doing deals with Internet bookseller and similar firms to bring non-traditional content to bear.

All this comes under the purview of Josh Grotstein, former senior vice president of content for Prodigy, who reports to Horowitz. Horowitz recruited Grotstein for the new position of division executive of the bank's global Internet and intranet programs several months ago.

As this hiring indicates, show business and business in general are drawing closer together. Horowitz was recently quoted as saying that "the only difference between banking and entertainment is that in banking, the pictures don't move."

PaineWebber entertainment and communications analyst Christopher Dixon agrees. Most Americans spend at least eight hours a day in front of some screen or other, whether it be an ATM, television, PC, airline monitor, or the like. "What comes through the screen: MTV (a Viacom property), stock quotes, the latest ARM rates, doesn't matter. This is how Americans, and people around the world, receive and process information," he says.

Large corporations, including banks, must come to terms with this new mindset and find ways to transfer information in a consumer-friendly manner. The challenge is huge; because of their size, Dixon says, it is easy for banks to get so caught up in systems that they totally forget the customer. The best system in the world is useless without the right graphic interface. "(Citi) needs someone with experience at a consumer entity like Viacom to understand and monitor how consumers adapt to the interface with technology," he adds.

Horowitz has also said that he expects 50 percent of Citicorp's business and revenues to come from electronic products and services in twenty years. Other sources wonder whether this massive push will become a solution looking for a problem.

covering the delivery bases

Meanwhile, Citi is hedging its bets on whether the future of consumer banking lies with the PC or telephone. Hence the appointment of Kevin K. Newman, vice president and head of global direct delivery, who reports to Campbell, and former CEO of Firstdirect Bank, Leeds, England. Now a division of Midland Bank PLC, the branchless bank established in 1989 offers a wide variety of products and services to some 675,000 customers. One industry insider calls his appointment a coup for Citi.

Citi faces major obstacles to bringing its vision to life. Notably, implementation has always been difficult for the bank, and although no longer sanctioned, the tradition of intramural competitiveness precludes effective teamwork. Some say that Reed's biggest challenge is getting the new hires to influence behavior down the chain of command. Others say that will require thousands of new staff positions. Alternatively, legions of mid-level non-believers in the technological initiatives are seen as the biggest stumbling block.

Industry watchers disagree on the impact of the rate and scope of organizational change at the bank, another Citi constant. Some call it counterproductive; others find it the only way to shake up the basic bank culture.

Talk of organizational change leads to speculation about whom Reed wants to succeed him. The connection between the immediate future of the corporation and its long range leadership easily arises every time major chess pieces are reassembled, especially when potential kings and queens check out. Pei-yuan Chia, head of the global consumer business until the 1996 reshuffling, is one such casualty. Yet word has it that Reed was sorry to see the departure of a more recent favorite, former credit card division chief Roberta Arena, who reportedly left this spring rather than report to Campbell when Citi folded credit cards into the consumer business.

How times change: Even without corporate banking experience, Campbell is considered one likely candidate to replace Reed when he retires. A few votes go for Amex CEO Harvey Golub, especially amidst continuing rumors of a merger between the two organizations. Insiders speculate that Reed might merge with Amex just to get Golub in the deal.

Reed could be willing to work out the issue of succession over time. Finding an organizing concept, creating a global brand name, and staying focused on the consumer while meeting nonbank threats and taking the lead in electronic banking is a bold undertaking. Yet boldness is necessary. "It is like the Gordian knot. You don't untie it, you break it," one source says. Of course, legend has it that King Gordius tied the original knot, which could only be undone by the future ruler. Alexander the Great cut it with his sword. --bosco

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