Citi's APAC retail banking head Gonzalo Luchetti talks of the bank's digital transformation

More than half of our Citi's Consumer Bank clients use digital channels.

Gonzalo Luchetti was appointed head of retail banking for Asia Pacific in January 2015. He joined the bank in 2006 and held positions in various units such as Citi's private bank, international personal bank, and wealth management & insurance.

Luchetti has been leading the bank in its journey to transform its retail business to a simpler, faster, and more scalable model targetted at emerging affluent and above clients.

In an exclusive interview with Asian Banking and Finance, Luchetti talks about the bank's digital strategies and transformation initiatives in response to the market environment to grow revenues.

ABF: How are you using digital across your retail bank to support your clients' changing preferences?
Our Global Consumer Banking business in Asia draws some 20 million visits to our online properties every month, and between 90% to 95% of all transactions already happen outside a branch. One out of every four new credit card accounts acquired comes from digital sources and over 50% of our clients are actively using digital banking channels, up from 30% three years ago.

Citi has embraced digital not only to transform our propositions, but also with regards to how we operate — digitally transforming our core business, accelerating growth and innovation and redefining the DNA of our organisation. In that regard, we are significantly shortening our time-to-market to bring solutions to our clients faster by utilising agile methodologies for design, development, and deployment.

We believe that Citi is uniquely positioned to deliver on this. We have the assets and scale to make the investments required, without compromising on the strength and integrity of our core systems and security. We have the existing networks, breadth of client base, licenses, liquidity, and reputation to succeed.

In Asia, we are focussed on how digital can enable us to deliver remarkable banking experiences to our clients wherever they are. The rapid adoption of mobile and other digital channels has transformed how and where our retail customers bank, sign up for cards or loans, pay their bills or invest, and for our institutional clients how they trade, invest, manage their cash, and pay their bills.

We are accelerating our digital capabilities and driving into new digital ecosystems to be compatible where many of our customers are active. We want to remove the friction from the lives of our customers and clients — making banking easier, faster, and better for them.

We are seeing strong results. In 2016, on average, we announced a new digital innovation or partnership fortnightly. Today, more than half of our Consumer Bank clients use digital channels with mobile being the fastest growing channel with 35% growth year-on-year.

We deepened our connections with clients via social media with launches on Facebook, Line, and WeChat in seven markets, and the Citi Asia social media community has grown from 3 million in 2015 to over 10 million in 2016.

Since the launch of Citi’s API Developer Portal in December last year, more than 1,000 companies have registered with us and expressed their interest to collaborate. At the beginning of 2016, we launched the newly refreshed Citi Mobile App featuring easy-to-use functionality and interface such as Snapshot and Touch ID which has seen over 2m million downloads to-date. We also launched Voice Biometrics across the region which has since received more than 700,000 sign-ups from customers with over 1 million clients consenting.

We also deepened our digital wallet offering with CitiPay, in response to the explosive growth in mobile adoption by our customers. Citi’s proprietary mobile wallet numbers in Asia account for 300% growth last year. We have also announced strategic partnerships in leading digital ecosystems in China, Thailand, and Singapore with Alipay, WeChat, and Line.

We also formed credit card digital partnerships with the likes of Amazon, Airbnb, Grab, Uber, Lazada, and AirAsia in various countries across Asia.

ABF: Does the branch still matter given most people bank online now?
Nearly 95% of all our transactions in Asia are now via non-branch channels. We do understand though that many clients still want to bank in a branch, but the main role of branches today is to acquire customers, drive brand awareness, and manage high value interactions for affluent relationships.

The nature of our physical network is evolving in response to client needs and we are investing in wealth management hubs to support our growth using digitalisation.
New Citi branches around the world are taking on the Smart Banking model, with interactive touch panels, video-conferencing capabilities, and full-service banking from iPhones and iPads. First launched in Asia in 2009, they have since been rolled out across the world. .

We have also located branches in hotspots in key cities such as Singapore, Hong Kong, and Shanghai located on commuter routes to serve customers on the go. We also use pop-up branches in high traffic areas such as shopping malls over weekends to offer discounts.

Technology and digitalisation are defining global trends and transforming the very way we serve our clients. Technology also enables us to improve our efficiency. Speed, simplicity, and ubiquity are guiding our use of technology across the world.

ABF: Asia Pacific is at the heart of Citi’s global retail banking business with 12 out of 19 markets globally. What is your strategy for future growth in this important region?
Asia is a priority region for Citi’s retail bank where our strategy is one of delivering sustainable growth and returns.

Asia presents compelling economic drivers and demographics — it has the fastest growing regional GDP and financial assets worldwide and accounts for 60% of the world’s population, including a massive and growing emerging affluent population that adapts quickly to new technology, in particular mobile.

2016 was an important year in Citi’s history in Asia, with a deliberate shift in strategy in response to the market environment to grow revenues. We reallocated resources to invest and build out our wealth management (which already manages US$210bn in AUMs) and digital capabilities to capture new growth opportunities.

Our retail business is being transformed to a model that is simpler, dramatically faster, more scalable, sharply focussed on emerging affluent and above clients, and far more digital focused with the goal to accelerate growth. That’s critical because our Asian consumer business, as you said, is key to our strategy — 12 reside in Asia and Asia also manages five markets in EMEA including the UK, the UAE, Bahrain, Poland, and Russia.

This strategy is already showing good results. Revenues for the fourth quarter for the consumer franchise were up 4% with EBIT up 22% year-on-year, which are the results of our strategic decision to invest resources into digital and our wealth management business. More clients are investing through our refreshed wealth management platform.

Having recaptured growth, we are now looking to consolidate that growth into sustainable momentum across our businesses. We have clear priorities for 2017 and we will make targeted investments to deliver sustainable growth and returns.

In Consumer, we want to drive net new client growth and digital will be a key channel to achieving this aim. We want to go deeper into our target clients’ digital ecosystems to acquire new clients and better engage and service their needs and manage their payments online.

We will increase our connectivity with local developers and third parties through our APIs to bring new innovations to the market faster than ever before in our history.

We will continue to invest to be the undisputed leading wealth management advisor in Asia, and deliver new growth with a suite of innovations including our Total Wealth Advisor and Portfolio 360 capabilities which aim to provide a holistic financial advisory experience centered on the client. We will also continue to put the right talent and resources against our AIA partnership.

ABF: Citi is one of Asia’s largest wealth managers in the emerging and mass affluent sector. What are you doing to grow further in this space?
In Asia, we continue to differentiate our value proposition across segments focusing on providing a remarkable service and experience for our clients. Citi Priority, the emerging affluent value proposition, is now live in all our key markets with a new digital welcome experience and a range of preferred benefits and personalised services.

Citigold was re-launched in five markets, with the remaining markets following this year. This included new tools such as Total Wealth Advisor which uses sophisticated models for goal-based financial planning utilising Citi’s global expertise in private banking and institutional markets. Furthermore, we introduced the Citigold Diversification Index, an exclusive internally designed framework to help clients assess, optimise, and protect their investments. Since its initial launch, we have completed more than 39,000 portfolio reviews.

At the same time, for our Citigold Private Client proposition, we launched Portfolio 360º in five markets, enhanced our product suite with the launches of Portfolio Finance, Liquid Alternatives, & HNW Insurance. We also had a 48% increase in Wealth Management centres with new launches such as in Korea with the Banpo Hub.