Citigroup, one of the largest banks in the world, is making a strategic move to increase its revenue by targeting smaller clients. Traditionally known for serving only the largest clients, Citigroup is now expanding its focus to include small- to medium-sized businesses (SMBs) with annual revenues between $10 million and $3 billion. This shift in strategy was reported by the Financial Times on August 28th, indicating a significant change in Citigroup’s approach to client acquisition.
According to the report, Citigroup is targeting SMBs around the world, with a specific focus on countries like Canada, France, Germany, Ireland, Japan, and Switzerland. Over the past two years, the bank has added commercial lending units dedicated to SMBs in these regions, signaling a concerted effort to tap into this market segment.
To support its efforts in pursuing SMBs, Citigroup has made several strategic moves. The bank has named a half dozen new regional leaders and acquired a stake in FinTech company Numerated. By leveraging Numerated’s machine learning models to manage loan data, Citigroup aims to streamline its lending processes and better serve its SMB clients.
Citigroup’s reorganization has also played a crucial role in enabling the bank to focus on SMBs. By restructuring its operations, Citigroup believes it can do a better job of cross-selling and expanding its client base. Additionally, regional banks facing challenges such as high interest rates and commercial property losses have limited their ability to lend, creating an opportunity for larger banks like Citigroup to step in and fill the gap.
The increasing importance of technology in business lending has also favored larger banks with the resources to meet this demand. Citigroup’s investment in technology and its focus on providing tailored services to SMBs position it well to capitalize on this trend and attract more clients in this segment.
While commercial banking clients currently account for only a small portion of Citigroup’s total annual revenue, the bank sees significant growth potential in targeting SMBs. By doubling down on its efforts to serve smaller clients, Citigroup aims to increase its revenue and expand its market share in the commercial banking sector.
Tasnim Ghiawadwala, global head of commercial bank at Citigroup, highlighted the bank’s ability to generate incremental revenue by providing mid-sized corporate clients with the same services offered to large companies. This approach allows Citigroup to tap into a previously underserved market segment and drive growth in its commercial banking business.
Small businesses have historically faced challenges in accessing financing, as banks tend to favor larger commercial borrowers. The Small Business Administration reported that a significant amount of potential SBA loans went unused in the previous fiscal year, indicating a gap in the market for small business financing.
As SMBs continue to seek access to credit and financing options, Citigroup’s focus on serving this segment could prove to be a strategic move that not only benefits the bank but also supports the growth and development of small businesses around the world. By expanding its client base to include SMBs, Citigroup is positioning itself for long-term success in the commercial banking sector.
