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Citigroup fined $400 million over ‘failure to establish effective risk management.’

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Two months after one of its bankers accidentally sent nearly $1 billion to the wrong people, Citigroup agreed to pay $400 million to federal regulators over long-running problems keeping its daily operations under control.

The regulators — the Federal Reserve and the Office of the Comptroller of the Currency — said Wednesday that Citi had been engaging in “unsafe and unsound banking practices,” including in its programs to catch money launderers.

Citi had failed to fix problems that had been identified over a period of years, the regulators said. The O.C.C. called the bank’s deficiencies a “longstanding failure to establish effective risk management.”

Citibank is in the midst of a major transition — its chief executive, Michael Corbat, will step down early next year and be replaced by Jane Fraser, Citigroup’s president — and must now make improvements to satisfy both regulators. Among the necessary steps: making its executives’ roles clearer and creating a stronger link between their pay and their effective stewardship of the bank.

“We are disappointed that we have fallen short of our regulators’ expectations, and we are fully committed to thoroughly addressing the issues identified,” the bank said in a statement.

The regulators’ actions come amid an embarrassing scandal in which a Citi banker accidentally wired $900 million to a group of lenders to the beauty products maker Revlon. The bank is struggling to recoup the money; it sued the hedge fund Brigade Capital Management in federal court in Manhattan to force it to return $175 million, but Brigade is claiming it is entitled to keep the money.

The Revlon mishap is not Citi’s only recent error. The O.C.C. cited the bank’s violations of the Fair Housing Act in 2019 and the Flood Disaster Protection Act earlier this year, and attributed both to Citi’s inadequate risk management procedures.

The bank has also had trouble keeping track of the flow of illicit funds through its accounts. Over the past few years, it has grappled with problems in its Banamex USA unit, where prosecutors in 2017 said drug smugglers were using the bank to sneak dirty money into the United States from Mexico. Citi paid more than $97 million to settle a criminal inquiry into Banamex.

The $400 million penalty is being paid to the O.C.C., which is also requiring Citi to quickly create a new committee, comprised mostly of nonexecutive board members, to preside over a risk management revamp inside the bank.

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3 Secrets to Building a Winning Sales Culture

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October 25, 2020 7 min read

Opinions expressed by Entrepreneur contributors are their own.

Let’s hire a hotshot, expert closer, and to make sure the rest of the company helps out, let’s add “everyone sells” as a rallying cry to address our slumping

I have heard that line from so many companies struggling to generate sales. In an average organization, sales rely on the capabilities of a few skilled individuals who are rewarded for creating as many transactions as possible. They do whatever it takes to close the deal and create temporary results — temporary because they must be consistently recreated for a to survive.

On the other hand, everyone else attempts to rise to the vague “everyone sells” call-to-action, despite being plagued by the question, “What does that mean exactly?” If sales becomes absolutely results-driven without consulting anyone else, the company will become less productive and effective.

According to a seven-year study by GiANT Worldwide, the average functions at just 58 percent of its potential because it is not intentionally capturing the genius of eeach person. Instead, it relies on the drive of just one or two “leaders.” Imagine what that means for your business. How many more clients could you serve, and what would revenue and sales look like, if you harnessed more of the team’s capacity?

Related: 5 Things About Your Brand Your Sales Team Must Sell

So how do you build a winning sales ?

Secret 1: Never hire a rockstar salesperson if you want your company to grow 

Instead, build a balanced team, because who is on a team matters less than how the team members interact, structure their work and view their contributions. According to 5 Voices authors Jeremie Kubicek and Steve Cockram, a winning culture includes five specific type of contributors that complement each other’s weaknesses and are essential to business growth: the Pioneer, Connector, Guardian, Creative and Nurturer. 

The Pioneer is usually the person in charge. In this case, the rockstar salesperson is vital because they are results-focused and strategic in thinking. Unfortunately, once they have an idea they want to execute, they rarely ask for input or opinion. Often, they dismiss others they believe are not competent or as experienced as they are. This behavior can be a major contributor to the low functioning of a team. The alternative is to create an intentionally dynamic team

A Connector is the evangelist of ideas and an expert at finding resources. They always seem to know a person who knows a person who can help. They love to share what is happening and inspire others to engage by just talking about an idea. As people pleasers, they have difficulty challenging ideas and will just go along, but often tell people different stories to get agreement. When those people compare notes, they think they were being lied to when the Connector feels they were telling each the same thing.

The Guardian is the process-and-systems guru and key to scaling any operation. They hate to waste resources and are risk averse. A focus on the here and now means they ask the tough questions about how you are going to move from where you are to where you want to be. “We’ll figure it out as we go” is not an option. These folks often clash with the go-getters on a team because it feels like an anchor holding everyone back.

The Creative is an idea scout. When they hear something, they immediately start analyzing all the routes to goal-achievement, including a detailed risk assessment about what is the smartest way to get there. They tend to be perfectionists and may push to avoid as many stumbling blocks as possible in a strategy or plan. 

Finally, there is the Nurturer. This is someone who knows the pulse of an organization and is a natural team player. They will always put people first and are great representatives of the how your customers will respond to a product or service and how the company will respond to a change. They will always ask, “Does this feel right? Is it the right thing to do by the customer and the company?” But because they do not like conflict, they will hold on to their ideas unless they feel absolutely safe.

Secret 2: Be intentional with company culture from the start

Much like business processes, company culture is inherently dynamic. It is the result of a constant interaction of elements and practices that grow and change with the company. These can be either accidental or intentional.

An accidental culture will organically form based on the mood and behaviors of the individuals in it. This is usually how toxic environments form, as the norms of acceptable behavior are defined by the few who are in charge. 

On the other hand, an intentional culture is one that deliberately monitors team performance to establish practices and behavioral norms to make everyone feel safe when sharing ideas. It focuses on communicating vision and direction.  It makes certain that everyone is aligned so that they know exactly how they contribute to the company’s success. It’s an “everyone is in sales” culture

Secret 3: Align everyone around the customer experience

The key to the “everyone is in sales” rallying cry is an effective and impactful process designed to reflect the experience you want your clients to have. This starts with creating a map of the customer journey that identifies every opportunity for a service breakdown. Involve all staff who are involved in a process at these critical interaction points. Be sure to collect data about the process to keep the conversations objective and avoid the blame game.

Once you have identified the breakdowns, convert those to breakthroughs, and redesign internal processes to support the customer journey to be what you want every client to have. Involve every process stakeholder in the process to build support for the ideas, and increase adoption through a heightened sense of accountability for the sales process.  Through engagement of the team, the sales process becomes core to everyone’s job and not left to the person in the field making the deals.

Related: 4 Strategies to Make Your Sales Funnels Convert in 2020

Historically, impressions of a winning sales culture have been predicated on the false beliefs that: 1. Because a rockstar salesperson can temporarily save a company, we should just hire more of them; 2. Focusing on culture won’t provide a measurable ROI; and 3. Culture is something to worry about after we resolve our revenue issue.

To change your business reality, do an honest assessment of the team tendencies and determine which of the contributing voices mentioned above is missing. Hire to fill that gap so that you have an inclusive, balanced culture. Set rules of engagement that show that it is OK to be wrong or fail because you support each other. Focus on intentional communication; not a need-to-know basis exclusion, but transparency in message and content. Finally, make sure everyone knows how they contribute to the customer’s experience.

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Apple, Google and a Deal That Controls the Internet

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OAKLAND, Calif. — When Tim Cook and Sundar Pichai, the chief executives of Apple and Google, were photographed eating dinner together in 2017 at an upscale Vietnamese restaurant called Tamarine, the picture set off a tabloid-worthy frenzy about the relationship between the two most powerful companies in Silicon Valley.

As the two men sipped red wine at a window table inside the restaurant in Palo Alto, their companies were in tense negotiations to renew one of the most lucrative business deals in history: an agreement to feature Google’s search engine as the preselected choice on Apple’s iPhone and other devices. The updated deal was worth billions of dollars to both companies and cemented their status at the top of the tech industry’s pecking order.

Now, the partnership is in jeopardy. Last Tuesday, the Justice Department filed a landmark lawsuit against Google — the U.S. government’s biggest antitrust case in two decades — and homed in on the alliance as a prime example of what prosecutors say are the company’s illegal tactics to protect its monopoly and choke off competition in web search.

The scrutiny of the pact, which was first inked 15 years ago and has rarely been discussed by either company, has highlighted the special relationship between Silicon Valley’s two most valuable companies — an unlikely union of rivals that regulators say is unfairly preventing smaller companies from flourishing.

“We have this sort of strange term in Silicon Valley: co-optation,” said Bruce Sewell, Apple’s general counsel from 2009 to 2017. “You have brutal competition, but at the same time, you have necessary cooperation.”

Apple and Google are joined at the hip even though Mr. Cook has said internet advertising, Google’s bread and butter, engages in “surveillance” of consumers and even though Steve Jobs, Apple’s co-founder, once promised “thermonuclear war” on his Silicon Valley neighbor when he learned it was working on a rival to the iPhone.

Apple and Google’s parent company, Alphabet, worth more than $3 trillion combined, do compete on plenty of fronts, like smartphones, digital maps and laptops. But they also know how to make nice when it suits their interests. And few deals have been nicer to both sides of the table than the iPhone search deal.

Nearly half of Google’s search traffic now comes from Apple devices, according to the Justice Department, and the prospect of losing the Apple deal has been described as a “code red” scenario inside the company. When iPhone users search on Google, they see the search ads that drive Google’s business. They can also find their way to other Google products, like YouTube.

A former Google executive, who asked not to be identified because he was not permitted to talk about the deal, said the prospect of losing Apple’s traffic was “terrifying” to the company.

The Justice Department, which is asking for a court injunction preventing Google from entering into deals like the one it made with Apple, argues that the arrangement has unfairly helped make Google, which handles 92 percent of the world’s internet searches, the center of consumers’ online lives.

Online businesses like Yelp and Expedia, as well as companies ranging from noodle shops to news organizations, often complain that Google’s search domination enables it to charge advertising fees when people simply look up their names, as well as to steer consumers toward its own products, like Google Maps. Microsoft, which had its own antitrust battle two decades ago, has told British regulators that if it were the default option on iPhones and iPads, it would make more advertising money for every search on its rival search engine, Bing.

What’s more, competitors like DuckDuckGo, a small search engine that sells itself as a privacy-focused alternative to Google, could never match Google’s tab with Apple.

Apple now receives an estimated $8 billion to $12 billion in annual payments — up from $1 billion a year in 2014 — in exchange for building Google’s search engine into its products. It is probably the single biggest payment that Google makes to anyone and accounts for 14 to 21 percent of Apple’s annual profits. That’s not money Apple would be eager to walk away from.

In fact, Mr. Cook and Mr. Pichai met again in 2018 to discuss how they could increase revenue from search. After the meeting, a senior Apple employee wrote to a Google counterpart that “our vision is that we work as if we are one company,” according to the Justice Department’s complaint.

A forced breakup could mean the loss of easy money to Apple. But it would be a more significant threat to Google, which would have no obvious way to replace the lost traffic. It could also push Apple to acquire or build its own search engine. Within Google, people believe that Apple is one of the few companies in the world that could offer a formidable alternative, according to one former executive. Google has also worried that without the agreement, Apple could make it more difficult for iPhone users to get to the Google search engine.

A spokesman for Apple declined to comment on the partnership, while a Google spokesman pointed to a blog post in which the company defended the relationship.

Even though its bill with Apple keeps going up, Google has said again and again that it dominates internet search because consumers prefer it, not because it is buying customers. The company argues that the Justice Department is painting an incomplete picture; its partnership with Apple, it says, is no different than Coca-Cola paying a supermarket for prominent shelf space.

Other search engines like Microsoft’s Bing also have revenue-sharing agreements with Apple to appear as secondary search options on iPhones, Google says in its defense. It adds that Apple allows people to change their default search engine from Google — though few probably do because people typically don’t tinker with such settings and many prefer Google anyway.

Apple has rarely, if ever, publicly acknowledged its deal with Google, and according to Bernstein Research, has mentioned its so-called licensing revenue in an earnings call for the first time this year.

According to a former senior executive who spoke on the condition of anonymity because of confidentiality contracts, Apple’s leaders have made the same calculation about Google as much of the general public: The utility of its search engine is worth the cost of its invasive practices.

“Their search engine is the best,” Mr. Cook said when asked by Axios in late 2018 why he partnered with a company he also implicitly criticized. He added that Apple had also created ways to blunt Google’s collection of data, such as a private-browsing mode on Apple’s internet browser.

The deal is not limited to searches in Apple’s Safari browser; it extends to virtually all searches done on Apple devices, including with Apple’s virtual assistant, Siri, and on Google’s iPhone app and Chrome browser.

The relationship between the companies has swung from friendly to contentious to today’s “co-optation.” In the early years of Google, the company’s co-founders, Larry Page and Sergey Brin, saw Mr. Jobs as a mentor, and they would take long walks with him to discuss the future of technology.

In 2005, Apple and Google inked what at the time seemed like a modest deal: Google would be the default search engine on Apple’s Safari browser on Mac computers.

Quickly, Mr. Cook, then still a deputy to Mr. Jobs, saw the arrangement’s lucrative potential, according to another former senior Apple executive who asked not to be named. Google’s payments were pure profit, and all Apple had to do was feature a search engine its users already wanted.

Apple expanded the deal for its big upcoming product: the iPhone. When Mr. Jobs unveiled the iPhone in 2007, he invited Eric Schmidt, Google’s then chief executive, to join him onstage for the first of Apple’s many famous iPhone events.

“If we just sort of merged the two companies, we could just call them AppleGoo,” joked Mr. Schmidt, who was also on Apple’s board of directors. With Google search on the iPhone, he added, “you can actually merge without merging.”

Then the relationship soured. Google had quietly been developing a competitor to the iPhone: smartphone software called Android that any phone maker could use. Mr. Jobs was furious. In 2010, Apple sued a phone maker that used Android. “I’m going to destroy Android,” Mr. Jobs told his biographer, Walter Isaacson. “I will spend my last dying breath if I need to.”

A year later, Apple introduced Siri. Instead of Google underpinning the virtual assistant, it was Microsoft’s Bing.

Yet the companies’ partnership on iPhones continued — too lucrative for either side to blow it up. Apple had arranged the deal to require periodic renegotiations, according to a former senior executive, and each time, it extracted more money from Google.

“You have to be able to maintain those relationships and not burn a bridge,” said Mr. Sewell, Apple’s former general counsel, who declined to discuss specifics of the deal. “At the same time, when you’re negotiating on behalf of your company and you’re trying to get the best deal, then, you know, the gloves come off.”

Around 2017, the deal was up for renewal. Google was facing a squeeze, with clicks on its mobile ads not growing fast enough. Apple was not satisfied with Bing’s performance for Siri. And Mr. Cook had just announced that Apple aimed to double its services revenue to $50 billion by 2020, an ambitious goal that would be possible only with Google’s payments.

By the fall of 2017, Apple announced that Google was now helping Siri answer questions, and Google disclosed that its payments for search traffic had jumped. The company offered an anodyne explanation to part of the reason it was suddenly paying some unnamed company hundreds of millions of dollars more: “changes in partner agreements.”

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Score Apple’s Powerbeats3 Wireless Earphones Today at a Discount

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These powerful earphones were made for an active lifestyle.

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October 25, 2020 2 min read

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When you’re working hard every day, you need to blow off some steam from time to time. Whether you like doing that by running, cycling, boxing, or just going on a long walk, music is always a welcome accompaniment. And the best way to enjoy your music is with a set of high-powered wireless earphones like the Apple Powerbeats3.

A product of Apple’s acquisition of Beats by Dre, these Bluetooth earphones will take any workout to the next level. The earphones have a long 12-hour battery life and secure-fit ear hooks that ensure they stay comfortably in your ears, no matter how hard you work. Plus, the Fast Fuel charging feature lets you get one hour of playback on just a five-minute charge, so if you power down at the end of your workout, you can get one last burst of music.

The Powerbeats3 have an improved ergonomic design that provides clear, dynamic sound through dual-driver acoustics. They’re also sweat- and water-resistant to give you unparalleled durability, whether you’re running in the rain or just sweating a lot.

CNET writes, “The Beats Powerbeats3 Wireless offers an improved fit, very good sound for Bluetooth sports headphones, reliable operation, and strong battery life.”

Upgrade your wireless listening game without breaking the bank. Normally $89, you can get a pair of Apple Powerbeats3 Wireless Earphones for 13 percent off at just $77.99 now. They’re also available in Indigo or Violet.

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