E-Citi Banking on Wireless

As part of its bold plans to increase its customer base tenfold, to 1 billion clients by 2012, Citigroup Inc. last week launched a project aimed at delivering wireless banking applications to customers by year's end.

The project, led by the bank's e-Citi unit, is geared to help the bank's global customers pay bills, trade stocks and access their accounts using mobile phones, smart phones, personal digital assistants and digital television.

Citigroup rolled out mobile phone-based banking services to customers in Singapore and Hong Kong earlier this year. But to use the services of Citibank, Citigroup's consumer banking operation, customers in those regions must use a specific mobile phone service. The added project is aimed at allowing customers "to manage their finances using any device from anywhere at anytime," said Alan Young, a vice president at e-Citi in New York.

To make that possible, e-Citi has partnered with 724 Solutions Inc., a Toronto-based vendor whose software was designed to connect any device to any mobile network. To secure those transactions, e-Citi has tapped Sonera SmartTrust, a Helsinki, Finland-based mobile communications vendor.

E-Citi is expected to roll out its first wireless banking applications in Asia sometime in the fourth quarter, Young said. The bank plans to deliver wireless stock trading and bill payment applications sometime next year, he added.

Young declined to quantify e-Citi's investment in the wireless banking project. However, he said it costs less than building new branches and call centers and adding automated teller machines.

Citibank isn't the first financial services firm to jump into the wireless banking fray -- nor will it have an easy time of making the project work, analysts said. Other banks piloting wireless banking applications include BankAmerica Corp. in Charlotte, North Carolina, Dresdner Bank AG in Frankfurt and Barclays PLC in London, said Octavio Marenzi, research director at Meridien Research Inc. in Newton, Massachusetts.

Another hurdle for Citigroup: Most of the mobile phones used in the U.S. are analog-based, which means they can't accept or transmit text-based messages, Marenzi noted. Plus, it will be a "big challenge" for Citigroup to process wireless transactions, because each of its country offices has a different back-office environment, said Bill Bradway, also a Meridien analyst.

Young conceded that the financial services giant faces some significant scaling issues. "It's easy to throw one baseball, but it's not easy to throw a billion baseballs," he said.

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