I take a lot of inspiration from local fintechs that naturally have the advantage of being more nimble than large domestic or global banks. At Citi, we can learn a lot from the way they quickly implement solutions and adapt their business models.
At the beginning of 2020, preceding the Covid lockdowns, Citi Australia made headlines announcing it would close the last of its brick and mortar branches in Australia, seemingly overnight transforming the global banking giant’s antipodean arm into a digital-only player (though maintaining its call centre presence no less).
Alan Machet, chief executive of Citi Australia’s consumer arm, oversaw the retail bank’s successful ‘pivot to digital’, with 95 per cent of transactions already occurring via digital channels in the lead-up to Citi’s final branch closure. FST took Machet aside to briefly explore Citi’s digital pivot, as well as opportunities for the bank in the new CDR ecosystem, how the surge in buy now, pay later (BNPL) services is shaping its numerous credit offerings, and insights on effective leadership in the midst of crisis.
FST Media: Citi Australia notably shuttered its last ‘brick and mortar’ branch in February this year, making digital channels ever more important for customer interfacing. How is Citi tailoring its digital agenda in the wake of Covid-19 and changing consumer needs?
Machet: Citi has been focused on digitisation for many years. We finalised our move to a branchless model early this year, but even prior to this we found that more than 95 per cent of transactions were occurring outside of our branches. This placed us in a strong position to manage the challenges associated with the Covid-19 lockdown, as our clients were used to engaging with us digitally.
It’s an advantage that foreign banks or smaller players have locally, as our major domestic banks need to continue to have a physical presence. There is always more that can be done digitally, and we are continuously working to improve in this space – whether by enhancing our app or reducing our use of paper-based forms.
FST Media: What has the Covid-19 crisis revealed about the state of customer experiences offered by Australian banks? Where do you feel the industry has done well – and conversely, potentially missed the mark?
Machet: The nation as a whole has shown remarkable empathy and adaptability, and we can be proud of this. I think the banking industry did a great job of supporting Australians experiencing financial hardship as a result of Covid-19, including via deferral programs and additional support measures for credit cards and home loans.
The challenge now will be in the transition away from these measures to a ‘business as usual’ standpoint, and we will need to ensure that we are still supporting our customers with ongoing hardship needs. We also need to continuously be thinking through how our value propositions can change to offer more relevant solutions. For example, airline rewards may be less relevant today, but discounts on home delivery services are more valuable than ever. This is one small example of where we are starting to apply this thinking.
FST Media: It’s no secret that ‘buy now, pay later’ service providers have enjoyed exponential growth in recent months – accelerated, perhaps by the Covid-19 pandemic. How do you see Australia’s consumer credit market evolving into 2021, and what will this mean for Citi?
Machet: Credit is a fascinating space at the moment, and the rise of ‘buy now, pay later’ (BNPL) is an undeniable trend that is forcing credit card providers to innovate to match consumer demand. At Citi, we offer instalment plans that have been very popular with customers, allowing them to break up their purchases or statement into a series of smaller payments at a pre-determined (lower) interest rate; however, because they are attached to a credit card, customers are credit-checked accordingly, differentiating these products from a responsible finance perspective. We are continuing to work on our offers in this space.
We should also note that the recent announcement by the Treasurer about changes to the responsible lending laws and regulation are likely to enliven this space even more.
FST Media: With Open Banking officially underway, what opportunities do you see for Citi to enhance customer offerings through the Consumer Data Right? How will Citi leverage its collective strength through its global arms to build a competitive arsenal against local fintechs and incumbent banks?
Machet: There is immense potential associated with Open Banking, and it should favour smaller or newer banks in Australia, as it makes it easier for consumers to move away from the banks they have always used and try new competitors.
Currently, we are in a competitive position, not just against the big four but also against other international banks and neobanks as well.
While I am very supportive of start-ups and fintechs in the banking space, I do think today their situation is very difficult as they try to build client numbers and engagement in an uncertain economic environment. Ultimately, more competition is positive for the consumer, so I hope they can succeed despite these challenges.
FST Media: In preparing Citi Australia to thrive in this new era of digital-centric, customer-focused financial services, who – or perhaps what industries – do you look to for inspiration?
Machet: I take a lot of inspiration from local fintechs that naturally have the advantage of being more nimble than large domestic or global banks. At Citi, we can learn a lot from the way they quickly implement solutions and adapt their business models.
We often take a ‘partnership’ approach to looking at fintechs, meaning that when we do see a company that is delivering an outstanding solution, we approach them to see how we can leverage their work and apply it to Citi’s environment.
At Citi, we are also lucky to get exposure to some of the best US and international organisations, as well as our teams in other markets, who have been very innovative through Covid and learning from them.
FST Media: As Covid-19 irrevocably transforms corporate life, how do you feel leaders in financial services can best manage this new remote working reality? Further, what will effective leadership look like where remote working is increasingly the norm?
Machet: Leaders have really stepped over a boundary between work and personal life this year, as we were virtually welcomed into our colleagues’ homes via the nature of video chat. More than that, our conversations had to take on a more personal nature as Covid-19 and associated isolation drove us to have conversations about mental health and to really ramp up the focus on the wellbeing of our employees.
It’s a silver lining of a difficult situation that I feel closer to my colleagues now than ever before.
And I think the challenge for leaders going forward will be to maintain this connection while gently encouraging those who feel comfortable to start splitting their working hours between the office and home, to start getting back some of the benefits of face to face collaboration.
FST Media: On a more personal note, what do you do to ensure a healthy work-life balance?
Machet: I like to wake up early to ensure I can have some time for myself and my family before a busy working day. This can mean going for a run, walking my dog, or having breakfast with my wife and two sons. While working from home, I like taking calls from the garden – simply walking bare feet in the grass and taking in some fresh air can really shift your perspective and re-energise you between meetings.