Citibank before Digital Disruptions

Discuss about the Strategic leading of digital transformation large.

Digital disruptions in the corporate world define the changes that occur and affect the value proposition of existing services caused by new digital technologies and business models (Bughin 2017). Deloitte (2012) identifies digital disorders as the transformation brought about by how companies and corporate businesses adapt to the disruptive technologies which affect business engagement with their customers (Karimi & Walter 2015, p, 42). The most challenge that has faced many organizations is the need to update their existing technology, strategies as well as their supporting methodologies to adapt to the new technological changes. The primary focus of digital transformations has been on how businesses can create more value to their customer’s thought their life cycles (Gilbert 2015, p 166). This report, therefore, will help us understand the impact of digital disruptions in the banking industry by analyzing how the industry offered their services before and after digital disruptions to their customers. We will be able to establish whether it has created any value to the customers or even changed the business model of the organizations. We focus on the impact of Digital disruptions to the Citibank Financial institution.

Citibank group is a multinational financial services group with its headquarters in New York. The bank was founded back in the year 1812 as the city bank of New York and provides financial services to its customers such as offering credit cards, provision of mortgage, commercial and personal loans as well as other lines of credit (Huerta et al. 2015, p. 194). The bank has over 2649 branches in 19 countries with most subsidiaries in the United States and Mexico City. It is recognized as one of the early financial institutions to experience digital disruptions and adoption of new technology in enhancing customer value creation in their service provision.

Work centered analysis framework provides an opportunity through which most business processes and systems can be analyzed (Ghose et al. 2016, p. 2). The structure, therefore, outlines or provides a designed business system showing how human participants with the use of information and technology perform business processes. The figure below shows business processes under the work centered analysis framework.

The significant elements of work centered analysis include the business customers who may be either internal or external, the product or services provided or offered by the business, and the significant steps in the business process (Chheda, Duncan, & Roggenhofer 2017). The study also identifies the participants and information used as well as the technology used to deliver added value to the customers.

Work Centered Analysis Framework

Figure 1: Citibank work centered Analysis before digital disruptions table

customers	Both internal and external customers Services obtained at the banking institituion Service offered by bank tellers to customers
products	Main products included cash deposits and withdrawals. Used bank letter to authorize the transactions
Business processes	Queuing process in banks to deposit or withdraw Manual updates of transactions and bank account balances One required a bank letter to authorize any transaction
participants	Included the bank customers both internal and external customers
information	Personal id numbers Account numbers Stored manually in accounting ledgers
technology	No significant technology employed

Customers were obtaining al their banking services including withdraw and deposit their money at the financial institutions. They were served by bank tellers, and quieting systems characterized the business due to a large number of people to be helped (Weill & Woerner 2015, p. 27).The banking services or products were not capable regarding access since it took a long time to access the facilities and services could only be offered at a specific period, which is when the banks are opened.

The significant steps in the banking services before digital disruptions included; making bank deposits and withdraws through the bank tellers, manual update of the account balances and verifications of transactions through receipts. The primary approaches would require obtaining a bank letter which legalized or authorized sales (Peppard & Ward, 2016, p. 3). The main participants included the bank customers, and they would be required to produce their banking information such as personal id numbers and their bank account numbers. There were no significant technology innovations used then, and most of the transactions were manual.

Digital disruptions brought a change in the banks business model as well as its processes. The digital transformation brought about the introduction of credit cards and automated teller machines in the banking industry to enhance service provision to the bank’s customers through value addition.

customers	Customer base increased for both internal and external banking More branches opened to serve the wide customer base More hours for working to improve efficiency in customer services
Products	Introduction of credit cards Introduction of ATM machines Large banking database for storage Tellers simple tasks digitalized and replaced ny machines
Business processes	Withdraws and deposits could be done anywhere through use of credit cards Transactions authorized in print information Replacement of bank tellers with ATMs for simples services
Participants	Remained to be the bank customers The number increased due to expansion and service delivery
Information	Information required from the participants included, account numbers, personal Id number or even the credit cards. Stored in a central computers
Technology	Great innovations through introduction of ATMs, digital credit and Visa cards, a central computer system.

Brief explanation of the digital impact from the table after digital disruptions

The process of customers withdrawing or depositing money become easier and effective through digitalization of banking services and the introduction of automated teller machines and credit cards which enhanced convenience and increased efficiency in service provision and therefore resulted to value addition to customer service.

Digital disruptions led to increased availability of banking services by increasing the number of banking sites as well as the banking operational hours. For example, in the United States, the bank has over 700 branches whereas in Mexico City the bank has over 1200 offices. This increased the accessibility of banking services to a wide range of customers. With the introduction of Automated teller machines, the banks were operational or could offer services to their customers 24/7.

The significant actions after digital disruptions included making bank deposits; making withdraws, verification of the transactions authorized as well as updating account balances and providing print confirmations. These services would be offered in the past by tellers in the banks, but with the introduction of the automated teller machines as well as the banking database it became easier to perform these services using the information technology (Vives 2017, p. 97). The primary approaches in the business process involved the replacement of bank letters which were used before digital disruptions to authorize transactions with ATMS for simple banking transactions. The bank then went ahead to maximize the availability of the automated teller machines to cover broad customer coverage and enhance the access to these services.  The bank would also enable or maintain a real-time link with the central banking database.

Citibank after Digital Disruptions

The main participants remained to be the bank customers both internal and external customers. These participants were required to specific information in accessing the services such as the customer ID number, the account number and could obtain information such as account balances, amount of deposit or withdrawals made by the customer among others. Digital disruptions, therefore, enhanced digital banking technology by introducing Automated teller machines, telecommunication services and also through the introduction of a central computer.

The impact of digital disruptions in the banking sector cannot be overlooked. One of the significant results was the replacement of teller related functions with the automated teller machines. Which means that human labor in the industry is under threat with increased innovations as technology will be able to customize these services (Dodgson et al. 2015, p. 329). However, regarding value addition to customer services, the impact of digital disruptions has had significant improvements regarding improving accessibility to banking services, increasing efficiency in service delivery, increasing accountability through providing relevant accounting information and account balances after every transaction. The increase banking services have led to the growth of the banking business which is evident through the increased number of branches and high expansion rates to other countries as well as increased banking revenues. For example, when city bank introduced or adopted digital or information technology in their service provision the bank had an increase in its market share from 4.5 to 13 percent in the period between 1978 and 1987 (Komninos 2016, p. 246). Such an increase in market share also represents an increase in the bank’s revenue. The banking industry is speculated to experience complete digital transformation by the year 2020 where most services will now be conducted digitally and primarily through the increased risk of the mobile technology.

Full integration and readiness to counter the impact of digital disruptions has not being maximized, and therefore there is a risk that in future their digital disorders will lead to severe consequences if not appropriately managed. The bank may suffer the problems of increased labor turnover which may have a significant impact on the image of the company and increased cost of training. There is also a risk of adopting new technologies which are not compatible with the business model. This comes in as a result of fear that the company will be challenged by its competitors in the industry. Lastly, the bank may be at risk of balancing the company long term and short term goals by adopting technology which may help the bank achieve a short-term strategy and become incompatible with future or even existing technologies. Lack of innovative minds and having a conservationist mindset may also affect the bank regarding their readiness to adapt to new technologies.

Impact of Digital Disruptions

Therefore, it is recommended that management of Citibank should have the right digital mindset by shifting the ideas and behaviors of the organization to facilitate positive changes. There is also a great need for the management of the bank to have a digital strategy as this will help the institution to align their short-term strategies to future company strategies and also align them to company direction as well as to the values of the business. Having digital principles is very critical for the bank in helping them integrate digital decisions across the company workforce and processes. Lastly, I recommend that the management of Citibank should be careful in managing technological innovations by adopting technologies which influence and enable the future works of digital transformation in the organization.

The management of the Citibank should start by understanding the nature of their business and the markets they are operating. Secondly, evaluate the business internal and external requirements or needs and how technology can be used to bring a change or transformation to the business. There is also a need to access their competitor’s strategies in the market and understand the type of technological innovations they are using (Sedera et al. 2016, p. 371). Once they have identified the need for the company such as the staffing needs, it is essential that they develop effective digital strategies which will help them meet they’re short-term as well as the long-term company goals. However, high emphasis should be based on the acquisition of technology that will be cost-effective and leads to value creation regarding improving service provision to the customers and achieving business growth through increased revenues.

Conclusion

Digital disruptions have had significant impacts on the modern corporate world with substantial changes leading to positive transformations and increased business growth. However digital conversions have also led to increased labor costs through training and also led to increased labor turnover in most companies where digital machines have replaced some simple tasks which were previously managed by some people. It is important however for the management of every organization to adopt technology and innovations which fit the current business model and align with future goals of the organization. The impact of digital disruptions is therefore tremendous and has revolutionized the way organizations see their customers and how they can help in creating value for their customers through improved customer services through the use of digital transformation technologies.

References

Bornhofen, B., Byrne, L., Bray, D., Elder, R., Feight, R., Pinnola, K.H., Shimshi, F., Quinlan, R. and Cheeseman, M., Citibank NA, 2018. Method and system for the issuance of instant credit. U.S. Patent 9,898,780.

Bughin, J., 2017. The best response to digital disruption. MIT Sloan Management Review, 58(4).

Chheda, S., Duncan, E. and Roggenhofer, S., 2017. Putting customer experience at the heart of next-generation operating models. Digital McKinsey”, March.

Dodgson, M., Gann, D., Wladawsky-Berger, I., Sultan, N. and George, G., 2015. Managing digital money. Academy of Management Journal, 58(2), pp.325-333.

Ghose, R., Dave, S., Shirvaikar, A., Horowitz, K., Tian, Y., Levin, J. and Ho, S., 2016. Digital Disruption: How FinTech Is Forcing Banking to a Tipping Point. Citi GPS.

Gilbert, R.J., 2015. E-books: A tale of digital disruption. Journal of Economic Perspectives, 29(3), pp.165-84.

Huerta, J., Ning, Y. and Dalle Mule, L., Citibank NA, 2015. Methods and Apparatus for Quantitative Assessment of Behavior in Financial Entities and Transactions. U.S. Patent Application 14/138,194.

Hyvönen, J., 2018. Strategic leading of digital transformation in large established companies–a multiple case-study.

Karimi, J. and Walter, Z., 2015. The role of dynamic capabilities in responding to digital disruption: A factor-based study of the newspaper industry. Journal of Management Information Systems, 32(1), pp.39-81.

Komninos, N., 2016. Smart environments and smart growth: connecting innovation strategies and digital growth strategies. International Journal of Knowledge-Based Development, 7(3), pp.240-263.

Peppard, J. and Ward, J., 2016. The strategic management of information systems: Building a digital strategy. John Wiley & Sons.

Sedera, D., Lokuge, S., Grover, V., Sarker, S. and Sarker, S., 2016. Innovating with enterprise systems and digital platforms: A contingent resource-based theory view. Information & Management, 53(3), pp.366-379.

Sia, S.K., Soh, C. and Weill, P., 2016. How DBS Bank Pursued a Digital Business Strategy. MIS Quarterly Executive, 15(2).

Vives, X., 2017. The Impact of Fintech on Banking. European Economy, (2), pp.97-105.

Weill, P. and Woerner, S.L., 2015. Thriving in an increasingly digital ecosystem. MIT Sloan Management Review, 56(4), p.27.