ON December 18, IIM Bangalore turned 25. That's when it got Citibank's on-campus, on-line banking station,Cyberzone (the first in India). Cyberzone comes armed with state-of-the-art facilities—phones, PCs, automated teller machines (ATMs)—thanks to which, students can pay coffee bills, buy stationery, and even get education loans, all charged to their credit cards. Exults Ashoke Dutt, head (consumer bank): "It's the beginning of a new cashless era."
For long, Citibank had been working on the image of being the bank for the affluent in India. "We want to change that by moving to the low-end, high-volume segment. Besides, we want to create a life-long relationship with a customer by catching him young and pre-empting and fulfilling his varying banking needs as they change in various stages of his life," elaborates Dutt.
Rivals are sceptical. Shrugs Harpal Dugal, head (bank card division), Standard Chartered: "Citibank is merely trying to respond and react to the virtual card monopoly that we have over the youth market." Standard Chartered has been active in the management institutes since 1995-96. Citi, however, insists that this is no salvo in the card wars; it's a technology-driven, research-backed, brand-new concept in marketing credit—with a brand-new nomenclature to boot: lifestage marketing.
The premise of this concept is that an individual's credit needs keep changing as he grows. In the 20-25 age group, a student wants an education loan; in late 20s, he wants consumer durables; with marriage comes the desire for a car; mid-career, the need shifts to a housing loan; finally come equity advance products or annuity income needs and so on.
Not that banks have not been fulfilling these needs. But the approach has been what Dutt calls the 'shotgun' approach: catch the customer, spray him with an array of products, back it up with courteous service and quality. But that's not all that it takes, going by experience. Customers don't respond to products shoved down their necks. They are more receptive when they actually perceive the need for a product. Warns Dutt: "The customer is not an amorphous entity. You need to customise your product to suit individuals."
A mantra arrived at through intensive research. In May '97, Citibank initiated a study and came up with different age groups of people, and a profile of their needs. It has drawn a 'straw person' for each category. One such straw is the student. Research revealed that students were indifferent to banks because they saw bankers as remote and unapproachable. They were also most receptive to the idea of electronic delivery and not having to physically go to withdraw/deposit money.All of which has gone into the Cyberzone at IIM-B.
Traditionally, students and the first-jobber segment are the low-profit, low-transaction segments. As a result, all retail banks have focused on the small, more profitable, middle-age segments. The changing demographic profile condemns this. By 2010, today's big spenders will have retired, and 1997's teenagers will have taken their place as the most valuable financial services customers.
Citi's gameplan is long-term. If the Bangalore project succeeds, Citi will move on to target the lower and middle-income groups, confident that the four-tier strategy will pay rich dividends:
Citibank is looking at a win-win situation. The industry isn't. A competitor states that volumes will be small and margins thin. It would take some time before strategy materialises and translates into cash benefits.But then, Citibank already has the time advantage.
