By Bradley Keoun Sept. 11 (Bloomberg) — Citigroup Inc. Chief Executive Officer Vikram Pandit may be the Marty McFly of banking. Executives at Citigroup’s U.S. retail-banking unit have huddled for seven months to conceive a “Bank of the Future†offering rejuvenated Internet and cell-phone portals alongside branches, people familiar with the matter said. Citigroup hired 37-year-old Michelle Peluso , who helped modernize airline reservations as CEO of Travelocity.com , to lead the sessions. Like McFly, the character played by Michael J. Fox in the movie “Back to the Future,†Citigroup is reaching to the past to reinvent itself. In 1997, under then-CEO John Reed , the bank unveiled a short-lived plan to do away with branches wherever possible by pushing more customers to personal computers, telephones and automated teller machines, a technology that Reed helped proliferate. Pandit, unlike Reed, doesn’t plan to get rid of branches. Bankers have long assumed that “people who like online banking have no money, and people with money don’t like online banking,†said Seamus McMahon , a former regional president for HSBC Holdings Plc’s U.S. banking unit. Now, “there is a group of people who were in their 20s and are now in their 30s, and actually have some money.†Citigroup, which got a $45 billion federal bailout last year, is trying to swell U.S. deposits prized as a source of funding amid the global credit crunch. Wells Fargo & Co. and Bank of America Corp. have more than 6,000 domestic branches each, compared with Citigroup’s 1,001, and at least three times Citigroup’s U.S. retail deposits. Failed Wachovia Bid Pandit tried to bolster deposits last year by buying the failing bank Wachovia Corp., only to have the bid trumped by San Francisco-based Wells Fargo. As of June 30, Citigroup had $135.7 billion of retail-banking deposits in the U.S. and Canada. “They don’t have nearly the branch presence in the United States as their competitors,†said Edward Najarian , an analyst at institutional brokerage International Strategy & Investment Group in New York. “So they have to come up with something innovative.†Citigroup’s strategy-planning project, initially known as “Bank of the Future†and later given the official name, “Citi Forward,†is overseen by Teresa “Terri†Dial , 59, a former Wells Fargo executive who was hired by Pandit in March 2008 to run the U.S. consumer division. The unit had $1.76 billion of revenue in the second quarter, down 17 percent from a year earlier. ‘Project Harmony’ In an Aug. 27 memo to staff, Dial wrote that there’s a “significant and immediate opportunity to embrace a more client- and customer-centric approach across our product lines and delivery channels.†Key elements of the “service model†include “technology, the Internet and mobile,†Dial wrote. Liza Landsman, 40, a former International Business Machines Corp. executive who has worked at Citigroup for nine years, was named to head the Internet and mobile-banking team, according to the memo, which was confirmed by Citigroup spokeswoman Susan Thomson . Peter Knitzer , 51, a 13-year veteran who previously oversaw marketing along with Citibank Online and other duties, will leave the company later this year, Dial said in a separate memo on Aug. 26. Thomson declined to discuss specific products or services being developed under Citi Forward. A related effort, known internally as “Project Harmony,†aims to consolidate Web portals for personal banking and credit cards, so customers don’t have to log in separately, people familiar with the matter said. Some other banks, including JPMorgan Chase & Co. and Bank of America, already offer single sign-ons. Supported by Parsons Earlier this year, Dial hired Peluso, who was Travelocity’s CEO from 2003 through January, as a part-time consultant. Peluso previously had worked at Boston Consulting Group and served as a White House fellow in the late 1990s. Employees tapped for the project were told in February to gather for lunch in an executive dining room at Citigroup’s Park Avenue headquarters, the people familiar with the matter said. Peluso opened the meeting by saying she had just bumped into board Chairman Richard Parsons , who told her he was excited about the project and that it was important to the bank’s future, according to two people who attended. Parsons, 61, didn’t respond to a request for comment. Dial arrived later in the meeting and said she wanted to prove that having a smaller branch network than rivals could be a competitive advantage, two people familiar with the matter said. Dial wasn’t available to comment. Marketing Officer Sought The Citi Forward group has been meeting about twice a week, one person involved in the process said. In the Aug. 27 memo to staff, Dial wrote that she was searching for a new chief marketing officer to play a “critical role in helping us define the future for North American consumer banking and earn the right to our customers’ lifetime business.†Peluso, working under a consulting agreement, was appointed to the role on an interim basis, according to the memo. To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net
