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Putting the ‘I' in Citibank

Putting the ‘I' in Citibank

Omar Khalifa's first job after graduating as a mechanical engineer was working on the space shuttle launch facilities. Two decades on he's still in facilitation, only now it's e-business on the launch platform.

Appointed e-commerce director of financial services business Citigroup late last year, Khalifa, Egyptian-born and American-raised, has in his first 45 years on the planet had a rich working history in a diverse range of industries. The thread which binds them all is the useful application of technology in a broad context.

Khalifa thinks outside the square. When working with Apple he developed a system which used geographical information systems (GIS) to allow environmental scientists to model the effects of the Exxon Valdez oil spill. He worked on a team which developed a program to help scientists predict the spread of radiation following the Chernobyl disaster. He worked with the World Bank's Global Environment Fund in Geneva harnessing technology to deliver online reports on threatened coral reefs and ozone holes.

Arriving in Sydney in 1996 with his Australian wife, Khalifa swiftly found a position with Cable & Wireless Optus. "I was to define and launch their wholesale Internet business," he says.

The role was as much about the politics of competition as it was about technology. Khalifa had to go into battle with Telstra to ensure connection and capacity. At the same time he helped Optus define a business strategy. It worked, and the company swiftly won Telstra's big name client OzEmail, selling the company the telecommunications capacity it needed to underpin its Internet services.

By early 1997 Khalifa was the head of development in Optus' multimedia group. But he was still, in the eyes of many Australians, a bizarre animal. His CV is littered with the word Internet. "Everyone was looking at my CV and saying ‘Hmm'," he says. At the time few companies realised that they needed people with the skills Khalifa boasted; people who would be able to build bridges between business applications and the raw technology back-ends of the Internet.

By 1998 the penny had dropped with corporate Australia. Khalifa started taking calls from head-hunters who no longer said "Hmm" but "Please". First a call a week, then two a week, then a seeming torrent of head-hunters seeking someone who had the word Internet on their CV. Among the several offers he considered most were with new companies planning initial public offerings and offering new employees a slice of the action.

Citigroup also made an approach. It was looking for an e-commerce director. There was no IPO opportunity here. "It was a big opportunity, but it was working in a corporate environment," Khalifa says. "It was a choice between quick wealth or the impact of what you can achieve. There is risk with the former; or you can ask: ‘What can I do?'." Khalifa's working history reveals a man keen to make a difference.

As part of the recruitment process, Citigroup tried to show Khalifa exactly what he might be able to achieve within the organisation. It flew him to New York to meet the heads of the e-citi group, the corporation's global skunkworks, which employs 1200 people to explore how new technology can be best applied to the business. As a raw indicator of its computer and communications focus, each year it spends more than $US2 billion on technology. "Citigroup convinced me," Khalifa says.

Coming from a telecommunications carrier background with Cable & Wireless Optus, Khalifa thought he understood the Internet game as it was played in Australia. However, he explains that in fact the game had moved on, and the real challenge was now facing companies such as Citigroup: vast sums of money were being moved around the Internet on a regular basis.

It is a game with strict rules and harsh penalties. Khalifa explains that the "corporate DNA" that forms the core of a financial institution such as Citigroup is zero tolerance for the failure of a transaction. The systems that Citigroup would need were going to be as mission-critical as any he had worked on at NASA in his early career. "E-commerce is a core activity for the bank," he says. "It's something they cannot give up. They know this is the game. The telcos can continue to do telco things, but for the banks this is the business."

It was sufficient challenge to lure Khalifa on board by November 1999. Besides the underlying drivers, Khalifa was also impressed by Bill Ferguson, managing director of global corporate banking for Citibank Australia and also Citigroup country corporate officer. Ferguson was largely responsible for creating the position Khalifa holds and played a key role in the appointment process.

"His [Ferguson's] stance is that he knows things are changing and quickly and is asking how do we make this thing happen." Khalifa is part of the "making things happen" part of the equation. He says he is looking to develop an organisation and procedures which will let the company take full advantage of the information assets which it already holds. "[Ferguson] does not have a great understanding of e-commerce - but he knows that it is strategically important." Ferguson knew he needed someone of Khalifa's calibre to get the strategy right.

Who Do Guru?

Khalifa bridles under the description "guru", but in many ways that is his role. For the present. Ultimately, he believes that his role will change. He likens it to the old quality-control days when quality control managers were created, they developed teams, and plastered offices and factory floors with quality posters.

Eventually, though, it became clear that the drive for quality had to come from the company coalface. Only when every employee had committed to quality would quality be achieved. Khalifa believes it's the same for e-commerce. Ultimately the business will be e-commerce and everyone will be involved.

"There will be a whole transition as e-commerce bleeds through the business," Khalifa says. "Some day we will almost fade away as e-commerce becomes the business." Will he be unemployable then? No, he says, but he will be addressing different issues. For the present, however, he has to somehow develop an e-culture within the group.

Khalifa was not presented with a blank sheet of paper when he arrived at Citigroup. Most of the business units had some e-business activities or experiments. Khalifa describes them as e-business silos. Somehow he has to link those silos, in order to permit the cross-selling of the different products and services now gathered under the Citigroup umbrella.

Khalifa is also plugging into an existing pan-Asian Internet strategy described by Goldman Sachs in a report in December as having made "Citibank arguably the most Internet-ready bank in Asia" - a situation aided by its lack of legacy bricks-and-mortar branches throughout the region.

Another advantage, according to Goldman Sachs, is the bank's existing business model, which is not dissimilar to that of an Internet portal. Citigroup offers a broad range of financial services, which sit under an umbrella structure: think of Citigroup as the portal and the various services (Citibank being one) as the icons accessible via that portal. With this model already in place, Goldman Sachs believes the transition to e-business will be smoother for Citigroup than for many of its rivals which are more hierarchically organised.

Big Bucks

Citigroup as it stands today operates in 100 countries, has 100 million consumer clients and 25,000 corporate customers. It claims 50 million credit card accounts, $US381 billion in life insurance under management and $US515 billion in investments under management. Among the Citigroup brands are Citibank, Salomon Smith Barney Travellers, Commercial Credit, Primerica and Diners Club International. In Australia four groups operate under the Citigroup umbrella: Citibank, Citicorp Life, Salomon Smith Barney and Salomon Smith Barney Asset Management.

According to Ferguson, the challenge for Khalifa is to explore how new technology can be used to deliver products and services for all of those business units, and to retain a perspective on the operations of the Citigroup business units on a local, regional and global level. It's a big ask.

"The Internet is transforming the financial sector," Ferguson says, comparing it to the transformation wrought on the transport section by the internal combustion engine. "Yesterday we rode [a horse] home, today we take the car," he adds. For the financial sector the transformation is profound, Ferguson says, because "financial services is all about data. Finance is information and the current technology changes are transforming the sector."

Ferguson predicts that there will be many changes in the way banks deliver financial services, based on these technological transformations. But he maintains that several fundamental financial services will remain. Again, he likens it to transportation.

"The role of the horse was to get a person from A to B. When the car and the aeroplane came about, I still think that A and B were involved," he says. "In the same way there are fundamental financial services. You need to raise money to do things; you need payment and settlement services; there are a series of risk products, and you need advice.

"Those have been around for 700 to 800 years and will continue. But how we meet those needs is what will change, and who delivers those services may change," Ferguson says, adding that it may not be the old established players which prosper in this transformed world of financial services. "It may be the masters of the new technologies rather than the traditional financial companies," he says. "In our industry this transformation is right at the heart of the business - we deal in data."

To this end Ferguson rates "very highly" Khalifa's role in helping define Citigroup's future strategy. He is regularly invited to meetings of the senior management's coordinating committee to present what his team is working on, what the broader industry is doing, or how the company is transforming globally using technology.

As with any other member of the management team, Ferguson says that although it is not necessary that he and Khalifa be "close friends", it is important to be in tune and to share a common vision for the company. Ferguson, who is an economist and lawyer by training and a banker by profession, claims a reasonable comfort level with technology. He uses the Internet both personally and professionally, and is keenly aware of its shaping influence on the financial sector.

Each successive generation of CEOs will, he believes, be more technologically literate. However, he predicts that there will be a mixture of technological attitudes at CEO level for some time to come. He is unconcerned that more technologically savvy chief executives may follow him. "It is the CEO's role to pull together a team to deal with the realities of the marketplace."

Khalifa's role just happens to be handling a marketplace reality that is moving at warp speed, and is totally transforming the way in which financial services companies operate. The challenges ahead for Khalifa in juggling those "realities of the marketplace" are manifold. He has to facilitate cultural change, but also bridge some legacy technical problems, such as back-ending e-commerce applications into existing and disparate information systems.

He has forged relationships with the information technology departments which operate in the four business divisions - relationships which he considers two-way streets. Just as he sits in on some of the IT meetings and planning sessions, so does the IT management sit in on some of his meetings.

One of Khalifa's immediate challenges on taking over the job was to create his own small core team, which would drive forward the required changes. As of April, that mission was complete; he has a team of eight working with him in an open-plan office at headquarters. Khalifa acknowledges that forming the right group "was not an easy task". He brought in some people already within the business and took on some new hires. The four areas into which the team slots are products; e-technology; business development management; and a centralised Webmaster in charge of all Citigroup's Web sites.

Khalifa is presently installing the human links into the other parts of the organisation, both in Australia and in Citigroup offices around the world. For example, it has been important to create a link with a person in the e-citi group in the US to be "our eyes and ears". But Khalifa is not expecting that his operation will mirror what the American group is doing, largely because of the different nature of the banking and finance industries in the two countries.

"In a sense we are a counterweight to them," he says. By separating, he believes that a broader span of ideas will emerge from which the company can benefit. For example, in Australia he is enthused about the way the population has taken to mobile communications. "Hopefully, that will provide some very interesting capabilities here." Ultimately, he expects that this mobility can become pervasive throughout Citigroup's products.

Next Gen Customers

The company has already demonstrated its ability to innovate locally, for example with the iCard, which is the organisation's first attempts with online registration for credit cards.

Khalifa is fascinated by the nature of the banking products which will prove attractive to the upcoming generation of customers, the youth of today. This he paints as a generation glued to their mobiles, and who may possibly never step across the bricks-and-mortar threshold of a bank. For them he is looking to develop a whole new series of products and services.

But he also acknowledges the need to "polish the chrome" and apply e-commerce technologies to the products and services that the company already supports. So while he is enthusiastic about technology's ability to service that class of customer which may want mobile access to multicurrency accounts from anywhere in the world, he is also mindful of the need not to alienate those customers who may be averse to technology. "We cannot leave them behind," he notes.

Besides caring for the customers, Khalifa has to predict and plot the new competitive landscape which is emerging in financial services. He needs to school his people to become sufficiently agnostic so that they are not tied to any legacy systems. Supporting his group is, he believes, one of his principal tasks. He must provide the team with an environment that will allow it to develop, and presumably then feed that development back into the company.

Khalifa also believes he should apply e-commerce that will subtly change the things which Citigroup does, but in a way that will not make people think they have been through a great deal of change. His third task is to recognise and seize new opportunities: exploring what customers want and do, and creating new products and services which allow them to do that in new and better ways.

Although not specifically charged with the role of reshaping the company's culture, it is something which Khalifa and his team will probably have to achieve if they are to be successful. Already people have stopped commenting on the fact that he doesn't wear a tie. Nor does most of his team. "I want people who are passionate about what they do, not how they dress," he says.

Khalifa illustrates his meaning with an anecdote about his brother, who spent some time erecting corporate marquees. One day he was called on to erect a marquee to house executives attending a "happy hat Friday" event. The executives duly strolled over to the tent in their pinstripe suits, but topped off with their funny hats. "None of them laughed. They didn't get it. They were still men in pinstripe suits."

Khalifa's challenge is to get the men in the pinstripe suits in Citigroup to wear their e-commerce hats, and realise that their business is changing utterly.

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