April 30, 2011 / 16:31 IST
Citigroup Inc is staking out a new corner of the USD 900 billion payments industry, in the hopes that a longtime payments executive can find revenue growth for the bank there.
Paul Galant, who previously ran Citigroup's credit card and global transaction processing businesses, has since last fall been building up a new global enterprise payments unit for Citigroup.
That unit is bridging Galant's two former businesses, trying to boost the bank's long-term commercial payments revenues from companies including mobile phone operators, transit systems and cable companies.
"Citi counts these institutions as customers already ... but what we're looking at today is a different type of way to service" them, he told Reuters in an interview on Thursday.
The bank's unit will provide "business services to businesses, who then go on to provide services to their consumers," he said.
For example, Citigroup could develop a mobile payment system to sell to a wireless operator, so that the operator's customers could buy things with their phones even if they don't have traditional bank accounts.
But it remains to be seen how much revenue Citigroup's new unit will create for the bank -- or how soon it will do so. Galant told Reuters he did not know when his unit will start to generate meaningful growth for the bank.
Citigroup, which took USD 45 billion in US bailout money during the financial crisis, has returned to profitability and no longer counts the government as a shareholder. But like other large US banks, it is struggling to grow its revenues amid a volatile trading environment and weak loan demand.
The enterprise payments unit is currently developing three payments products, which will start to appear in the market before the end of 2011, Galant said.
He would not discuss other details, including the unit's budget and staff. The enterprise payments unit is focusing on developing products for four types of industries, he said, but he would not be more specific.
The unit's upcoming products will be tested in North America "and in other places," Galant said, identifying Latin America and Asia Pacific as general areas for potential growth.
Chief Executive Vikram Pandit has been increasingly turning the bank's attention towards those and other emerging markets, where Citigroup has a larger footprint than its main US competitors and more opportunity for growth.
Galant spoke to Reuters in Miami Beach after addressing credit card executives at the annual Card Forum and Expo, a payments industry conference hosted by industry publisher SourceMedia.
It was a prominent speaking role for Galant, who spent much of the past two years trying to stem a tide of losses in the bank's credit card unit during the financial crisis. He left that role for the new enterprise payments unit in September, when Citigroup hired longtime American Express Co executive Jud Linville to oversee credit cards as part of a large reshuffle of its US consumer bank operations.
Galant previously ran Citigroup's global transaction processing business, which makes some USD 10 billion in annual revenue and processes more than USD 3 trillion in commercial payments and securities every day.
Citigroup shares were down 5 cents at USD 4.54 in early afternoon midday on Friday.
