Originally named City Bank of New York, Citibank is one of the largest and most respected financial institutions in the world. It has played a significant role in many important advancements in banking, like being one of the first to popularize ATMs. For more than 200 years, Citibank has worked hard to become one of the top international banks, focusing on making banking easier for people globally. Their innovative thinking and global perspective have shaped their approach to banking throughout their long history.
In this case study, we will learn more about its history, business models and operations, strategic initiatives, current revenue, and future plans.
Overview of Citibank
Citibank, N.A. (where “N.A.” means “National Association” and is often written as Citibank) is the main U.S. banking subsidiary of Citigroup, which is a large international financial services company. The bank offers various services, including consumer banking, investment banking, advisory services, and treasury solutions.
It is led by Jane Fraser, who made history as the first woman to run a major Wall Street firm when she became CEO in February 2021. She joined Citibank in 2004 after working for ten years at McKinsey, a consulting company.
The bank serves over 110 million customers worldwide and has more than 2,500 branches. It is also dedicated to social responsibility, focusing on diversity and inclusion (D&I) as well as environmental, social, and governance (ESG) issues. It has invested hundreds of millions of dollars to help close the racial wealth gap in the U.S. and improve economic opportunities.
Its Action for Racial Equity initiative aims to increase access to credit in communities of color, support Black-owned businesses, and promote homeownership for Black Americans.
The Founding and History
Citibank was founded in 1812 by a group of New York merchants. They pooled their resources to create a bank that would serve their financial needs and support new ventures. It opened for business on September 14, 1812, with an initial capital of $2 million, which would be equivalent to about $43.4 million today.
In its early years, the bank primarily served local merchants and businesses. Over time, it expanded its services and clientele. In 1863, it became a national bank and changed its name to First National City Bank of New York. This change allowed it to operate more broadly across the United States.
Citibank was known for its innovative approach to banking. In the 1960s, it became one of the first banks to offer credit cards, which significantly changed consumer finance in the U.S. This initiative enabled the bank to expand its customer base and position itself as a leader in the banking industry.
In the 1980s and 1990s, it expanded internationally, and established branches in various countries. For instance, the bank began operations in India in 1902, and by the late 1980s, it was one of the first banks to introduce credit cards in the Indian market.
In 1998, Citibank merged with Travelers Group, forming Citigroup, which became one of the largest financial services companies in the world. This merger allowed it to offer a wider range of financial products and services, including insurance and investment banking.
Business Models and Operations
Its business model focuses on innovation, a strong global presence, and a diverse set of services. Some of its key components are,
| Retail Banking | Corporate Banking |
| Investment Banking | Wealth Management |
- Retail Banking: Citibank provides personal banking services, such as savings and checking accounts, personal loans, mortgages, and credit cards.
- Corporate Banking: It offers customized solutions for businesses, including commercial loans and treasury services.
- Investment Banking: Services include advice on mergers and acquisitions, raising capital, and market-making.
- Wealth Management: The bank assists clients in managing their investments through asset management and financial advisory services.
It generates revenue from various sources which include,
| Interest Income | Fee-Based Income | Credit Card Operations |
| Mainly from loans and mortgages. | From transaction services, investment banking fees, and asset management. | Revenue from interest and fees related to credit card usage is a significant part of its income. |
The bank operates in over 160 countries and uses its vast network to support international trade and finance, allowing it to serve a diverse range of clients effectively.
- Operational Strategies
The bank has recently restructured to simplify its operations, including retiring old systems and automating processes to boost efficiency. The aim is to reach an efficiency ratio of 60% in the medium term.
It is focusing on digital transformation by using innovative technologies. Its mobile banking platform enhances customer experience with features like instant card management and financial dashboards. This shift improves customer engagement and streamlines internal processes.
Strategic Initiatives
Citibank is making major changes to improve its operations and strengthen its position in the market. These changes focus on reorganizing the company, cutting costs, and finding new business opportunities.
- Organizational Restructuring
In 2023, the bank reorganized into five key divisions: Services, Markets, Banking, Wealth, and U.S. Personal Banking. This restructuring aims to make operations smoother and improve accountability. Each division now has its own leader who reports directly to the CEO, which helps ensure that strategies are aligned with overall business goals.
As part of this restructuring, it has cut about 7,000 jobs. This decision is expected to save the bank around $1.5 billion every year, contributing to a total savings of about $2.5 billion in the medium term. The goal is to lower operating costs while improving financial performance compared to competitors.
- Financial Performance and Growth Projections
Citibank’s financial results have been encouraging, with a nearly 40% increase in net income in the fourth quarter of 2024 compared to the previous year. This growth comes from strong performances, especially in investment banking and wealth management. The bank aims to grow its revenue faster than its expenses in the coming years.
The bank is launching new initiatives to expand its services. For example, it has announced a $25 billion private credit and direct lending project in partnership with Apollo, which will enhance its service offerings. Additionally, starting in 2026, it will be the exclusive co-branded credit card partner for American Airlines, which is expected to significantly boost its profits.
- Focus on Technology and Data Management
The bank is investing heavily in technology and data management to improve its operations. This includes making technology platforms simpler and enhancing data systems for better risk management. However, there are still challenges in managing regulatory reporting data effectively.
Citibank has introduced user-friendly digital products like Instant Personal Loans and Instant Mortgage Sanction in markets such as India. These innovations aim to improve customer experience and engagement.
Commitment to Transformation
Citibank’s primary strategy involves a long-term transformation initiative designed to realize the bank’s complete potential. This plan focuses on improving risk management and operational efficiency while continuing to invest in growth opportunities across its different business divisions. CEO Jane Fraser has highlighted the importance of these initiatives for achieving financial goals and providing value to stakeholders.
The bank aims to improve profitability by enhancing operational efficiency and reducing costs related to outdated systems. The bank expects to increase its return on tangible common equity (ROTCE) from 7.5% to 11%–12% by 2025. It also plans to grow revenue through strategic investments in technology and data management, while keeping a strong focus on customer needs.
