There are always cycles in bank investment, especially because, unlike in other sectors, the banking sector does not stand alone but depends upon many things, particularly a country’s macro-economic condition.
All this poses a challenge to bank managers, including Meliana Sutikno, the retail banking head of Citibank who always strives to introduce innovative products. “In view of increasingly tougher competition, we must offer the best,” she noted.
She gave as an example of when fuel prices in October saw an average increase of 126 percent, followed by a weakening of the rupiah against the U.S. dollar and a rise in interest rates, investors made their own calculations to quickly determine their investment strategies.
At that time people were redeeming their mutual funds in droves. Capital Market Supervisory Board (Bapepam) data show that redemptions as per August 2005 stood at Rp 27.2 trillion (US$2.93 billion), while the total funds redeemed in the following three months totaled Rp 63.9 trillion.
Every manager must have been troubled by the situation. The flow of investment seemed unpredictable. But, in fact, it is precisely in this kind of situation that a bank can cash in on the opportunities available. The funds from the redeemed mutual funds went to the money market, namely bank deposits and foreign exchange.
Based on these two instruments — deposits and foreign exchange — Citibank introduced several relatively safe swap-based investment products. Its Dual Currency Deposit, for example, enables bank customers to enjoy a higher rate of return than bank deposits in general. The Dual Currency Deposit is a product of mass nature. In addition, Meliana explained, Citibank also offers more customized products that conform to the needs of its customers. “We do not sell products but offer portfolios,” said Meliana, who started her career at Citibank NA in 1990 as a management associate.
There are two types of Citibank customers, she said, namely corporate and retail. To exploit the retail market, Citibank has four divisions: credit cards, consumer finance, personal loans and wealth management. Meliana deals with matters related to the latter, which used to be the least popular as it was considered just part of the services given by the bank’s branches to well-off or prime customers placing funds in savings or deposit accounts.
However, the trend has changed now as banks have started to exploit the potential of wealth management. Although customers taking this particular type of banking service may be small in number, they may contribute the largest in terms of money circulation in the banking sector. Bank Indonesia data as per December 2005 show that third-party funds circulating in local banks stood at no less than Rp 1.1 trillion. According to a conservative calculation, some 60 percent comes from premium customers, who may not account for more than 20 percent of all bank customers.
Among foreign banks, Citibank may be regarded the pioneer in priority banking. With its head office on Jl. Sudirman, Jakarta, this bank calls this premium service Citigold Wealth Management Banking, a product launched in 2002 and an extension of Citigold Priority Banking, another Citibank product launched in 1980. While Priority Banking focuses on exclusive services, Citigold Wealth Management Banking concentrates on the management of customers’ financial portfolios. “It is no longer necessary to be product-centered, but customer-centered,” said Meliana, who earned her MBA from the University of Wisconsin, Milwaukee, in 1990.
Exclusive customers require exclusive services. So a hypermarket concept will never apply to these premium customers as they prefer tailor-made products. Although there are many other investment products, what matters most is how to give such a service that enables a customer to achieve his/her goal.
Meliana, who in 2004 moved to HSBC as personal financial service head but returned to Citibank in September 2005, realizes that ordinary services are given by local banks but only a few banks provide customers with more specific services. And Citibank has really customized products different from other banks. Aside from being the largest credit card issuer in Indonesia, Citibank also targets the medium- and upper-class through its Citigold Wealth Management Banking program. These customers usually have a deposit or investable cash of at least Rp 500 million.
By depositing that amount, a customer can enjoy specific services, such as investment and financial management planning, the use of exclusive facilities at Citigold Center, such as safe deposit boxes, special merchant discounts and invitations to attend exclusive events such as fashion shows, music concerts, seminars, etc.
In addition, in terms of more serious financial matters, every Citigold customer can avail of the services of a Citigold Relationship Team, comprising a Citigold executive, an investment specialist, a foreign exchange specialist and support from research by global knowledge of the worldwide Citibank network. “We have about 80 Citigold relationships and all are of a high qualification standard that confirm to the Asia-Pacific standard,” Meliana said.
With the support of such a solid team, Meliana is convinced that Citibank can provide more customized services to its premium customers. The portfolio of a customer is usually made up of high-risk investments in trading, more liquid but short-term investments, long-term investments for a period of one year and longer and protective insurance. “There must be balance in someone’s portfolio to ensure that in case of fluctuations, one type of investment can be compensated for or helped by other kinds of investment. It is our job to tell them where they are better off investing their funds. We help them choose the right investment instrument,” she said.
Although acknowledging that she is not the only one responsible for this success, Meliana feels proud that Citibank, in the evaluation of Trisakti University’s Institute of Service Management Studies (ISMS), is one of 19 banks categorized as providing “service excellence and customer satisfaction.” The survey conducted by this institute in cooperation with Infobank magazine and involving bank customers in five areas as respondents led to Citibank Indonesia being named this year’s winner of the Best Bank for Services Quality award.
Today, bank customers are smarter in choosing a bank. They consider the services a bank provides and the bank’s management. Shariq Mukhtar, country business manager, Global Consumer Group, Citibank Indonesia, said banks must always give the best service. “Service is an ongoing process, that is why we try to improve it every day,” said Meliana who places her job above all else. Meliana added that the development of services was intended “to win customers’ hearts and create an interesting experience for customers.” (Burhan Abe)