Opening up new frontiers

US financial heavyweight Citibank is expanding operations in Northern Europe. Greg Anstead, CIO of Citibank International, Nordic region, forecasts great potential on the horizon.

With 27 years of IT experience at Citibank under his belt, Greg Anstead has pretty much seen it all when it comes to leveraging the power of technology. Up until last year he was CIO of Citibank Home Equity business in his native US – a US$50 billion portfolio delivering over $3 billion per month in home loans – but a career-long urge to ply his trade in foreign climes finally provided too much to resist. So he packed up and jetted half way round the world to Stockholm to become CIO of the Citibank’s operations spanning Sweden, Denmark, Finland and Norway. “As long as I have worked for Citi, it has always been a goal of mine to work outside of the US,” he explains. “After 27 years of technology experience with experience in the full gamut of consumer asset business, my youngest daughter graduated from high school and was going away to college so this was my opportunity to leave the kids in the US and take on opportunities that Citi is great for.”

From the moment he arrived at his Swedish base in September 2006, Anstead identified unique differences between his customers in Scandinavia and those he left behind in the US. “The Nordic customer is even more technology-savvy than those I served in the US,” he muses. “A high 90 percent of our customers use the internet on a regular basis while there are around 1.5 cell phones for each person here. They are comfortable with technology and they demand the convenience so the need to make web and mobile self service is mission-critical in the Nordics – even more so than the US.”

With such widespread adoption of technology, this is a region of Europe that Citi sees as having huge potential. Anstead openly concedes that his bank has a “small presence currently” in the region. He takes extra care to emphasise the word “currently”. In 2000 the lender acquired associates and has built a reputation as a personal loan business. However, Anstead’s appointment was one of a number of management changes as part of an aggressive targeting campaign by the financial giant to raise its profile in northern Europe. This has included the launch of new investment products, as the CIO reveals. “We have done a number of things to broaden our credit and products spectrum in the Nordics. We are adding new credit cards, we have re-evaluated a lot of our credit policies and moved to risk-based pricing.” It’s a strategy that is already bearing fruit. “We have gone from growing three to five percent per year to businesses that are growing in double digits – some 30 to 50 percent depending on the business.”

An Internet bank is in the pipeline too. “Certainly one of our goals getting an Internet bank started in the Nordics and we will at least start the process in 2008, with Sweden possibly being the first country.” And although Anstead says mobile banking is not yet available in the region, the bank has rolled out instant messaging to let customers know when they have been approved or if Citibank needs to see critical documents. However, Anstead and his technology team are piloting a mobile banking platform that will compliment Citibank’s planned online bank. Two projects that Anstead is certainly looking forward to offer customers.

Improved efficiency
Citbank has also made significant investments in technologies in the region to reduce costs and make the bank more efficient. This has included large investments decision technologies in order to move away from 100 percent manual underwriting to “real-time systemic decisions”. In fact, many of the bank’s businesses now have more than 90 percent of decisions being made manually, so that an underwriter never needs to look at an application. And in Sweden the day that the new technologies were launched manual underwriting was slashed from 100 percent to just 14 percent. “As our business grows we can’t just add more people every time we want to double our volume; so we make significant investments in technologies to reduce the number of people that it takes to run a business – such scan and destroy technologies and character recognition to reduce key strokes, as well as the investments in reducing manual underwriting."

So with new product offerings and the business showing healthy growth, all looks rosy. Anstead however, highlights a significant problem in the Nordics – staffing. With a labour market that is virtually in full employment it can be hard to attract employees. “In 2008 it will be hard to continue to grow at the aggressive rate that we have been growing today in a labour market that is fully employed. So we have to deploy technology literally at a faster rate than our growth plans and the lead-time even after you have identified good candidates is very long. So staffing has been, and will continue to be a limiter to out growth.”

Obviously, the traditional bank challenges affect Anstead’s division too. He cites compliance, fraud, and protecting the reputational integrity of the bank as falling into this category. Security is another. “We are a aggressively growing business and there is always somebody out there trying to take advantage of this so we always have to be on constant alert around protecting our due diligence around protecting our reputational integrity.” Part of the battle against he the fraudsters comes down to educating customers about the dangers – including phishing. It [phishing] is something that we identify from time to time,” Anstead explains calmly. “It happens and I guess that it will continue to happen but a lot of the phishing due diligence is around making your customer aware on our policies on authentication and making sure that passwords are never shared. It is also making sure our customers know how Citi does and does not do business so that they are atuned to the phishing scams.

Many of Citibank’s employees use the same products offered to the public. This can flag up any potential weaknesses. “We encourage our employees to use Citi products because if they can be the early indicators of phishing scams because they are sensitive to it and able to report it to the appropriate compliance arm of the business.” Citibank regularly looks at its internal procedures to identify potential weaknesses. “We have made great progresses on our web sites and we carry regular vulnerability assessments and ethical hacks,” he remarks. “We have significantly managed our exposure although it is not at zero on one of our key channels.” Anstead adds: “However, we still use a lot of direct mail and we have applications in gas stations with our Shell partners, but that ‘s an easy area for fraud to integrate and it’s much harder to manage and keep track of the exposures. So we can use technology to prevent fraud but where we are manual it is where we have to ramp up our due diligence and our focus.”

As the interview draws to a close, FST quizzes Anstead as to how he has seen the banking sector transform from a technology standpoint in his three decades within the space. He pauses briefly before delivering his verdict: “Believe it or not but a lot of things are different and a lot of things are the same that they said would different 27 years ago. Despite Citibank’s size and scale, the part of the equation that has not changed is that are core platforms are still COBOL-based mainframe applications.” Citibank is not alone in relying on ageing core banking platforms, although these were written off as dead more than 20 years ago. Customer focus has evolved considerably too. “There have been big changes in how we target our customers, especially with the huge boom in the web the way in which we use technology to find out what sites are customers are visiting and what drives them. So we have certainly made huge investments in the web.”