Why is Citi Selling a Product That Customers Don't Want?

I keep promising myself I’m going to lay off Citigroup (C) once and for all—then the company goes off and makes yet another idiotic decision, and temptation returns. Here we go again.

Have you heard about “myFi”?

Very Internet-sounding, I know. MyFi is short for “My Financial.” It’s supposed to be Citigroup’s new, all-in-one, de-siloed product offering, with everything from checking, to credit cards, to auto loans, to wealth management.

Sounds great, right? Except for one thing: customers don’t want it. If the failure of every attempt to create a financial supermarket over the past 25 years proves anything, it’s that consumers have no interest in one-stop shopping for financial services. So Shearson-AmEx was a bust, Prudential-Bache was a bust, and Sears Dean Witter was a bust. And Citigroup is a bust, too.

But the bankers insist on ignoring what customers really want. Consumers keep saying—in surveys, focus groups, and by voting with their feet—that they have no use for so-called “wrap” and package products, which is exactly what myFi is.

Instead, customers want products that are simple to understand, delivered with great service.

That’s not too hard to comprehend, is it? But Citigroup knows better. Rather than design a product that will actually deliver differentiated value, the company has come up with an offering only a product manager could love, custom-designed to maximize product sales and minimize customer satisfaction.

Citi says it’s currently testing myFi at 20 branches on Long Island. I suspect that the results of the test will be so dismal that any rational analysis would lead to the conclusion that the program should be junked. But Citi won’t be denied. It will find a way to justify rolling out the program nationally.

Soon after that—and I know I’m going out on a limb here—myFi will end up being a total, abject failure. Just like all the other attempts at all-in-one financial services offerings over the past 25 years.

Comments

[User 212167]

I agree completely. The are many programs out there in one way or another attempting to be a "one-stop shop" for financial services. They don't work because people like to shop and it is much easier to find one or two different types of accounts that the customer likes at one time instead of buying an entire package. Plus the "shopper" part of people is aware that "one big package" is usually overpriced. And the customer is frequently right.

[beni]

I think systems have improved to the point that the financial supermarket is worth revisiting. In the past, the products were never really connected, so it was more painful for people to have multiple products. Now, theoretically the back office systems are seamless, so most of the service failures that really annoy people may be eliminated. The one I like the most now is the program Chase is doing, where having current Chase products entitles you to a discount on others, so having a checking account gets you a lower mortgage rate etc. Thats something that people may be able to get behind

[Justaskme]

I totally disagree. Shoppers love one stop shopping....WalMart-Co...
Today's consumers like things easy. Here is the problem with Citi, their products are expensive.....How expensive are they? so expensive that with an employee discount, it's still expensive for their own employees. And with 300,000 employees that's a lot of customers you are losing out on. Ok now for the employees and customers they have....well they lose them because of customer service.....you wants to call a 1-800 number and be received by Tony in INDIA.......These employees in India are the nicest, most patient people in the world...but they probably have a high turnover rate because there is a 10 sec delay on every question......they are constantly in training.......finally after twenty minutes I ask to be transferred to the United Sates.....my question is answered. Citi got too big, and poor management.....It can be done and will be done....who will it be? JP Morgan? Jury is still out

[Emerald]

I have never experienced a good "one stop" financial firm. Citi could never get its act together and could never offer a better deal, such as discounts on multiple products similar to how insurance companies market their products. Fidelity comes close with checking, money market, investments and credit cards. A commercial bank could get more of my business if they had market rate money market products. A big internal problem at banks are their internal silos whee each group wants a piece of any earnings that the other group makes selling a given product. Citi always had this problem and I was an employee and customer.

[MarkMNatabank]

Most supermarkets offer multiple brands of the same product. The problem with the Financial Services supermarkets have been that they only offer the in-store brand. Imagine going to the A&P and only having A&P brand items to select from.

[CitiGuy]

I'm not sure what this ousted former bank head is talking about. MyFi is basically a discount brokerage service being offered to Smith Barney and Citi lower tier clients. It is not a wrap program as he states. It has a flat rate for equity trades.

Perhaps we should not be giving credibility to someone who was thrown out of the company that he founded.

[BankerJeff]

USAA proves that it is possible to succeed at being a "one stop" financial firm. They do it by offering the best customer service along with great products. Citi emphasizes a sales culture over a service culture. That is why they will fail at being a "one stop" shop.

[philipmax]

No wonder Commerce Bank is such a success. You know your product well.

I see myself as a typical guy. Not particularly willing to let the bank control my money so much as to have them "safely store" my money.

I expect my bank to be safe, insured, accurate, friendly and boring.
My bank is where I hide from products and salesmen. It is where I keep the residue of my funds after society has eaten it away with necessities such as mtg, taxes, utilities, credit cards, gifts , allowances, insurance, car payments, etc..

I do not want the bank staffer to accost me with a sales pitch, because he is compromising the sanctity of my relationship to the institution.

Now, bringing this thought to Citi. My impression is that these boys think that they have a right to abscond with my deposit. They view MY money as their's. This is why they pretend to offer "services" that end up costing the depositor dearly.

It's not enough for them to invest my deposits at a high rate, they actually have no intention of remitting it to me. I had a heck of a time just maintaining an ordinary checking account without the bells and whistles that were "pushed" on to me. It still ended up costing me. It's my money and I want it when I want it!!! Let's remember that.

I have had accounts with Citi for many years and have never had a pleasant trusting experience with them (my business required it)

I do have accounts with Commerce and find that they have their hands on the pulse of the depositor. They understand the need for convenience and utility and have executed it magnificently.

Citi just doesn't get it!

[MrTruth]

Citi is a bust? And MyFi (which, is not what Vernon describes) will be an abject failure.

Well Verny, I imagine one with any sense is arguing your expertise in failure; I certainly defer to your expertise in that regard, but you should get your facts straight about your subject matter before speaking.

On second thought, maybe not. This way is more interesting and if you stuck only to things you understood you wouldn't have much to blog about. Although I'm sure there are some out there who are interested in learning how to run a bank into the ground while treating the Firm and its shareholders money as a personal slush fund.