Transformation at Citizens Bank Case Study Solution
Case Summary
With the evolution in the banking business, the future for traditional banking practice is uncertain. Customer’s preferences tend to change regarding branch banking, they are inclined more towards online banking for their convenience. Overall banking sector is adapting to these changes by closing their branches and operating online banking system. Therefore, Citizen bank had to adopt new strategies regarding technological advancements as other competitor banks had already responded to it. The management had come up with the idea to launch Citizen Access, a digital bank to be operated separately.
For the company to effectively launch and run its online banking service it is recommended that a thorough market research should be carried out to target the potential customers. As with the evolution in the banking business, the future for traditional banking practice is uncertain. Therefore, the company is suggested to make heavy investments in modern technologies and provide their customers faster services reducing the cost to keep pace with growing consumers demand.
The company can provide incentives to increase loan ratio and should introduce new loan products through digital distributions channels to maintain the loan-deposit ratio. Marketing strategy is essential to promote the product. Consequently, it is recommended to use potential marketing strategies to advertise its digitalized bank, as strong competition exists in the market. The strategies suggested can be used to maintain the competitiveness.
Strategic Case Analysis
The Citizen bank had caught up through the tireless efforts made by Van Saun and the team, after being independent in 2014 from its holding company, The Royal Bank (RBS). Notwithstanding its potential growth, the management had keen focus on the changing trends and challenges of banking sector. To cope up with the changing trends The Citizens Bank had taken into consideration these issues and had come up with the idea of Citizen Access, a digital banking service to be operated separately.
Analysis of the issues
The issues are analyzed to get the insight of the market potential of the company and recommendations are made to select the best course of action for the potential future growth.
Technological advancements
By emphasizing on technology, it is concluded that the changing technology will turn the whole concept of branch banking in the next five years. Technological advancement had not only challenged the bank but overall trend of branch banking as in US the number of bank branches had decreased by 9000 over the last five years. In order to prevail, the bank need to adapt to these changes.
Based on the study it is suggested that the bank should invest more in modern technologies that is crucial in the modern world and it can also collaborate with the Fintech companies to expand their customer base. The citizen bank should also carry out a thorough market research in order to target its potential customers. A market research will help to identify the things required to launch a successful digital bank service. It will provide the company with all the market insights like the size of market, size of competitors, strategies implemented by the competitors, strengths of the market and so on. This data could help the company in several ways especially in achieving stable sales growth.
Growing deposits
The other challenge that the bank had to face was the growing deposits in accord to the lending business. The deposit growth had led the bank further away from the competitors.
After analyzing it is suggested that the bank should maintain the deposits to loan ratio by providing incentives on loans and encouraging new loan products through digital distribution channels. A digital platform would provide stable growth margins because of its efficiency and customers’ positive experience of efficient service.
Achieving the scale
In regional banking, rising interest was to achieve the scale. To reach the technological edge substantial investment is required. The change in the cost structure had proved to be beneficial for the larger banks that are operating at scale.
A potential marketing strategy should be acquired to promote the new digital banking service. As there is already a competitive digital banking app exists i.e. Finn by JPMorgan. Therefore, a strong digital infrastructure should be built to scale up the product service and there must be a product differentiation from the already existing app in the banking sector. These strategies can be used to reach the scale.
Risks associated with the new endeavor
Certain risks need to be taken into consideration while processing or rejecting the proposed plan of launching a new digital banking service. Based on these risks it is to be decided whether the proposed idea is feasible for the company or not. These risks are discussed as follows...........
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