It’s the age of the Internet – and Citizens Financial Group is looking to cash in on that fact with the recent creation of a new division, Citizens e-Business.
The main goal of this new division? Making money for the bank.
If we were to stay grounded and bank-centric, I don’t believe we would turn over the rocks to find opportunities to make money for the bank, said Hal R. Tovin, president and CEO of the new division, which will be headquartered at 28 State St. in Boston.
We’ve been involved in the Internet for a year and a half, two years now, Tovin said. We’re in the game. Now it’s all about accelerating the thinking and trying to find bigger opportunities.
Though other banks throughout the region are already venturing into the world of e-commerce, few are devoting an entire division to the effort, said Tovin, who left his position as chief marketing officer and director of convenience banking for Citizens in favor of heading this new endeavor.
Michael J. Formica, vice chairman of Citizens Financial Group and chairman of Citizens Bank of Rhode Island and Connecticut, will assume Tovin’s previous responsibilities.
What’s unique … is someone like myself giving up their day-to-day responsibilities and taking the time to think this through, said Tovin, adding that he is working closely with Citizens Chairman Lawrence K. Fish.
With this division getting the focus and attention and commitment from the top, we will get a successful strategy implemented, Tovin said.
That commitment also includes a significant financial investment. Though Tovin would not disclose any figures, he said the amount is proof that the bank is not taking this enterprise lightly
Tovin envisions Citizens e-Business as an entirely separate company in the future. But for now, the division is still in the planning and research stages. Much of that research is centered on the wants and needs of business customers.
That customer-oriented
thinking, whether banking or business customers, will set Citizens and this new division apart from the rest, said Tovin.
With Citizens’ merger with USTrust approved, and its acquisition of State Street Bank’s retail and commercial banking business last year, most would agree that this latest plan is yet another example of a big bank getting bigger. Citizens Financial Group is a $28 billion financial services company, has the second-largest bank holding company in New England, and is one of the 35 largest banks in the country.
But Tovin stressed that the creation of this new division will have no impact on the image Citizens strives to portray, that of an institution able to provide big-bank products with small-bank customer service.
This approach is very consistent with that [idea]. We’re continuing to protect our core franchise, Tovin said.
Our core business will still be focused on doing what’s made us a success, offering the products and services of a larger bank, but delivering them in a much more personal way. We’re not stepping away from that, he added. The Internet is a story all about personalizing things with people.
If the new division’s research yields opportunities for the bank to expand its online banking services, so much the better, said Tovin.
In Search of Profits
Some financial observers agree that a new division of Citizens should not compromise the bank’s promise of small-bank, personalized service.
What we have witnessed in the last two years is enormous growth in venture capital investments made by commercial banks, said Advest bank analyst James Moynihan, mentioning the successes of Chase Manhattan in New York and of Fleet. As others have seen these banks record significant profits from this kind of business, they’re looking to get into it too.
Will it impact the day-to-day banking operation and its ability to provide full services? No … One could suggest that greater profitability enables the company to go out and do more for its customers, he said.
Though the Internet is a hot commodity right now, Moynihan cautioned that the unusual profitability associated with e-commerce will not last forever.
No one knows when the ride with technology and Internet stocks will be over … but it will come to an end. The profits have been so great as to be abnormal, and, as seen over the years, abnormal profits come back to the mean, Moynihan said. When is the peak? Is it now? Was it December of last year?
If Citizens is judicious in its investments, it will survive whatever the future may bring, according to Moynihan.
They certainly don’t want to bet the bank in this area, and I know they won’t, he said.
Bank analyst Gerard Cassidy of Tucker Anthony expressed the same confidence in Citizens latest effort.
Look at Larry Fish to begin with. He’s probably one of the best retail bankers in New England, if not the country. He’s definitely a visionary, and he feels that e-business is on the cutting edge of the future of banking, Cassidy said from his office in Maine.
Larry Fish’s view of banking is that it should be like McDonald’s. A customer should be able to go in and get everything and anything they need, and very very quickly, Cassidy said.
Tovin pointed to his own extensive marketing background prior to joining Citizens five years ago, which includes five years of spearheading Shawmut National Corp.’s company-wide marketing effort and nine previous years of increasing responsibility in packaged goods marketing and advertising.
Larry didn’t bring in a tech guy to do this … The game, the business, the future is all for the customers, and that goes for business customers as well, Tovin said.
Citizens is a player here, just by the moves we’ve made. We’ve done the merger thing. We’re large enough to be here and be a player. We’re making sure we’re going to be here to provide the services [customers] would want from a bank.
