Citibank Markets To Only Rich People, Large Cities
True to its name, we suppose, Citibank will be focusing its marketing efforts on six major U.S. metropolitan areas and wealthy customers, and not the rest of us deadbeats.
A report in the Wall Street Journal on Thursday said Citigroup was looking to limit its overall consumer lending in the United States to credit cards and large mortgages, and plans to cater to largely affluent customers.
That report also said the bank may sell or scale bank its branches in cities such as Boston or Philadelphia.
Will it work? If you're a bank, is it better to have fewer, richer, more reliable customers? Is this a good strategy for Citigroup after two government bailouts?
Citigroup U.S. retail bank focusing on 6 cities [Reuters] (Thanks, Chuck!)
(Photo: pstardesign)
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In my experience, Citibank isn't so bright when it comes to running branches. They opened perhaps a dozen branches in my state a couple years ago. They did NO advertising or them that I ever say (but saw plenty of ads from local competitors) and I have two friends who recevied rude reception when they went into one of the branches to ask questions about accounts.
Then, about a year or so after opening, they announced they were closing them because they "were not performing as expected."
NO? You are a bank with few retail branches in a state, you open a handful, never advertise their services and offer poor customer service to those who wander in. Also, because you have so few branches, those who do bank with you have to really hunt to find one of our ATMs and not incur tons of ATM fees.
Wow, I am amazed it didn't not work out for you, Citibank!
That explains all those customers at work asking me why the store's Business Rewards Card (put out by Citibank) was being discontinued.
It's all part of the master plan to make money available only to those who already have it and force the rest of the world into poverty and subservience.
But all the 7-Elevens have Citibank ATMs! 7-Eleven is definitely not a magnet for affluent people.
@PLATTWORX: This must be a US-based thing, like shitty airlines. The Citibank branches in Japan (and it may also be the personnel working at the branches) are extremely helpful, very gracious to anyone that enters - account holder or not - and has been nothing but awesome since I've been here. Although, they have some rather lame requirements for having a Japanese checking account (like Y500,000 or so to open one), but the actual customer service has been top-notch. Plus they're one of the few Japanese banks that has an English website and will take non-Japanese-issued ATM cards.
Is it something about America that we keep taking the concept of "suck" to new, dangerous lows (or highs?)?
@RogerTheAlien: 50k US to open a chequeing account? Looks like citibank Japan is already doing what the US side wants to do.
I think it's partially cultural though.
@Scuba Steve:
I stand corrected; damn Google and their inability to include commas (and my inability to notice an extra 5).
"500 000 Japanese yen = 5 561.5 U.S. dollars"
Seriously, who puts spaces instead of commas?
@TCama: charging non-affluent, non-citibank account holders a service charge to use their ATM fee in 7-11 doesn't mean they're taking on 7-11's clientele as customers.
@B:
The Cristal Slurpee is served in a jewel-laden Chalice rather than a paper cup. Instead of a straw, it comes with a scantily clad woman (or man, your preference) to feed it to you via a spoon made of ivory harvested from the tusks of a woolly mammoth.
@PLATTWORX: I've been a Citibank customer for 14 years. When I opened my account, Citibank customer service (both phone and in-branch) was awesome. When I went into a branch with a question or problem, they fell over themselves to solve it. They treated all of their customers like they were special. It was like Amex in the 1980's.
Then they off shored their phone CSRs. Sometime after that, they stopped doing any CSR activities in their branches. The only thing that their staff will do is open accounts and take mortgage applications. And once you've got an account, walking into a branch with a question yields a response "Yes, I can help you with that, what you need to do is call 1-800-XXX-XXXX to get an answer to that question."
Their branches now are intended not to service their customers, but only to bring in business. They do still have tellers, and that's about it. Any activity any bigger than "here's a check, please deposit it into my checking account" is referred to their off shore phone CSRs.
It's the biggest bunch of suck I've ever experienced.
So a corrupt bank is shrinking the area it services.
Of all lines of business, I would think that a local or regional bank would step in to fill the void. I don't view this as a bad thing at all.
Citi opened a handful of branches in the Boston area last year-ish. I have never once seen a single person in one, including the one right in the middle of downtown.
Maybe a useful business will open in its place.
We could have let them go bankrupt.
Or would that get rid of a Democratic punching bag to use for fundraising?
@humphrmi: This is why more community banks and credit unions need to open up. Let Citi find ways to screw over and milk every last penny out of the uber rich. Everyone else should move on to a situation that is more within their interests.
Citibank made a huge deal about student loan reforms Congress was proposing. They told the local media that these reforms would cause 1100 jobs to be lost in South Dakota.
Citibank moved their student loan division to India years ago.
Citi can DIAF.
It's good they're sticking to NY. Cause otherwise that monument to corporate johns in Queens would really stick out like a sore, well, I don't want to use that word in a family website. Ok, maybe it's no family-friendly, sore dick.
This kind of approach is what the Community Reinvestment Act was designed to prevent. I predict trouble for Citi.
@AngryK9: It's called "competition". Assuming that federal regulators don't prevent others from moving into this market niche (And that's a big assumption), somebody will realize that there's money to be made here. After all, check-cashing operations are the super-high-cost version of banks; there's plenty of opportunity to offer much better service and still make a profit.
A lot of banks have private banking divisions which cater, and I mean CATER, to wealthy customers. It makes sense for the bank to service what is expected to be a large profit center; although with the charges for overdrafts these days, maybe the biggest profit center are the debit card holders.
Willie Sutton was asked why he robbed banks and he replied that's where the money was. Same idea here. Citibank is going where the money is; and they're a lot closer to Willie Sutton than to the good guys.
Deadbeats have no money.
Seriously, who puts spaces instead of commas?
Well, (much of) the rest of the world swaps our use of commas and periods (decimal) within number notation, so it's not the world plan in the world to avoid confusion. 5.561 is less than six in the US, but more than five thousand in many other places. (Swap it with 5,561.)
Do they really think rich people will be more likely to put up with their lousy service?
@Esquire99: In many European countries, spaces or periods are used instead of commas, and a comma in the place of a period as the decimal point. Thus, that number (5,561.5) would become "5 561,5" or "5.561,5" in those places.
If you want to know more, you can read all about it on Wikipedia: [en.wikipedia.org]
This reminds me of my local Chase branch. One time I was waiting on line and they had only two teller windows open: "Select banking" and "Business banking."
If you were not a select or business customer, you had to wait online until one of those types of customers was not waiting. It was the biggest "FU" I had ever encountered. I closed my account that day and never went back.
Citibank just opened a ton of branches in the wealthy Philly suburbs between 2007 and 2008. The problems? No advertising like someone above mentioned, and very inconvenient locations. Look on any corner and you will see PNC Bank, TD, Citizens, Wachovia, which are easy to get to. One branch in the middle of a walkable lifestyle center with no drive thru. It looks more like a boutique than a banking establishment, and is very inconvenient, and always empty from my observations. Another branch right down the road from this was built on top of a giant hill, far back from the roads so I doubt many people even know it's there. I love that a company that needed a bailout was blowing stupid amounts of money where people don't know Citibank (besides credit cards),and really dumb locations.
Citibank opened one branch a few years back in the Baltimore area - in what was previously an abandoned Krispy Kreme. I've never seen any advertising for it, and I don't know what the idea was - I mean, the customer area for a retail bank can't be more than a mile or two, so opening one location in a metro area is a puzzling strategy - no economies of scale or anything.
Who needs a Citibank anyway? My local credit union is growing like crazy! They have branches all over and offer a whole suite of services, including business loans.
First Union did something like this when they came to Philadelphia. Concentrate on business and affluent customers and let service to everyone else suffer. Except that a large number of small business owners were 'regular' customers. Screwing over a customer with a $5000 checking account balance doesn't go over so well if that customer owns a company doing $2 million of business with your bank.
It got so bad that First Union (or FU, as they were called) merged with Wachovia and took Wachovia's name.
Dumping the middle class is not a good long term strategy.
What, the five grand I have in my Citibank account is no longer worth their time? Oh well, unless they close it, they're stuck with me.
@PLATTWORX: I helped open a branch in Philadelphia about 2 years ago when they moved into Philly. I left them right after the failed Wachovia acquisition attempt, but before the bailouts.
The regional direction was AWFUL, like chickens with their heads chopped off. It's really not surprising that any of this happened.
No one can blame Citibank or anybody else for telling unprofitable customers to take their business elsewhere. But how, you may ask, can my little account be unprofitable when they charge me fees out the wazoo? Because their costs, primarily the cost of clerical labor, are likewise out the wazoo. Great as it would be to give a two-bit customer the same sterling service you give a million-dollar one, that service costs money. That's why the millionaires get to talk to human phone operators when they call but we peons get a three-level phone maze which requires us to enter perfectly a twenty-digit string of numbers, plus a PIN, before the bank will even talk to us.
@B: That was my thought too. What about all these celebrities you hear about who don't pay their bills?
@Kogenta: Citibank China wants 12K US or they'll charge a $50 account maintenance fee. I said no and went to Standard Chartered instead. Pity they have almost no retail banking operations in the US (well, online banking, I think, but no brick-and-mortar branches except for main offices in NYC).
Starting when? I am far from wealthy, so I'd like to know when I'll stop getting all the $^#* Citi spam in my mailbox. Why do you keep mailing me things? I'm in Los Angeles, but i don't have enough money to ever make you happy.
If they do that, they just abandoned over 75% of the rest of the populace. Like it or no, rural and small town loving consists of a large fraction of American living still. No small thanks to their (inflated) expected numbers and poor planning has resulted in branches opening, performing poorly and closing, leaving husks of buildings not able to sell due to inflated prices.
Citi deserves to burn in financial hell a little bit longer until they grow a brainstem.
I bet if they were advertising to poor people there would be an article here decrying them for it.
I would suspect that the focus on Wealthy customers in large cities is do to some expected regulatory changes in banking. All the consumer groups want to lower or eliminate bank fees. When you eliminate overdraft fees small customers are no longer profitable. I suspect they are wanting to get wealthier customer base before the rules are changed.
@ophmarketing: Exactly. This is kind of a silly post. To be consistent, I think the consumerist should post an article on how Mercedes and Nordstroms are evil for only marketing to upscale customers and not to the poor (or the rest of us deadbeats).
Standard 80/20 rule. 80% of a banks profits come from 20% of their customers. It makes sense that they would focus more of their marketing efforts to that 20%. If not for that 20%, the remaining 80% wouldn't get a lof of the free services they have.
@Esquire99: Shhhh. 7-11's secret menu is secret for a reason. I don't want to see it show up in the next "Secret Menu" post. 7-11 has some quality stuff they don't like to advertise.
Who will their debt collectors serve?