Not Just Banking

If you visit most banks' Web sites, you get what you expect: some information about the bank, and a way to conduct transactions, check balances and transfer money. It's all very utilitarian. Efficient, but little else.

Go to Citibank (C)'s Web site, and you get all of that - but you also get chat rooms, news feeds and links to gardening and travel sites.

Excite (ATHM) and Yahoo (YHOO) don't need to worry. But Citibank is making a major push to become a one-stop online shop that fulfills the financial needs of all its customers, from consumers to corporate banking clients. To co-opt an old Citibank ad slogan, it's not just banking: It's a community.

"Banking has always been relationship-based. Now it's becoming more of a communications business," says Josh Grotstein, Citibank's division executive for global Internet and intranet programs. "We have to be within one click of the mouse or one call of our customers at all times."

Can a major global bank create an online community? By installing Grotstein, a former marketing exec with Prodigy and NBC, and his boss Ed Horowitz, a former Viacom (VIA) exec, as leaders of the online initiative, Citibank took a significant step in that direction.

At first glance, the stakes don't seem so huge. Analysts say that between two million and five million people do at least some of their banking online. The money to be made by letting customers pay bills and check balances online is pretty small; Zona Research forecasts $250 million in revenues this year, rising to $3 billion in 2002.

But it's the margins that count. Transactions that cost a bank $1.07 offline cost only a cent online, according to researcher eMarketer (dossier). And banks see basic account transactions as the first step toward getting people to use other services like mortgages, credit cards and investments.

Citibank's online push is part of an effort to grow from 60 million customers to an incredible 1 billion worldwide by 2010. Citibank, which had $21.6 billion in revenues last year, claims to have a customer in one of every five U.S homes; it wants to replicate that worldwide. Its online strategy is one of the most aggressive yet to build relationships.

Using virtual-community technology from The Mining Co., Citibank has introduced bulletin boards, forums with Citibank executives and chat sessions. The site also features headlines from CNN, stock prices from Reuters (RTRSY) and a variety of "channels" themed to college, business, family and travel. The channels contain links to partners like Amazon.com (AMZN), Fodor (dossier)'s and Garden.com (GDEN).

Citibank also wants to use the Internet to create relationships in the corporate banking business. "By combining versions of intranets and extranets, we can allow treasury departments and CFOs to communicate better to us and to each other," Grotstein says.

Citibank plans to bulk up its online banking for the business world in the next six to 12 months. The bank is already a leader in some of the markets for which companies are likely to turn to the Internet: payment systems to suppliers and customers, foreign exchange, derivatives and cash management.

Despite the community push, Grotstein says Citibank isn't going after the portals. Instead, he says, Citibank is talking with the major portals about its plan to become an online-banking anchor tenant.

Netscape is rumored to be a leading candidate. Last month it struck a $20 million deal under which Citibank will license Netscape's e-commerce software.

Netscape said the licensing deal did not involve its Netcenter site, but neither company would rule out a broader alliance.

"Citibank understands how banking will be transformed by the online medium," says Daniel Ambrose, general manager of Guideways, The Mining Co.'s virtual-community program. "They know the future isn't clear. They know they have to place smart bets in a number of areas, so that when the fog lifts they'll be