Digital Banking

Citigroup To Lure Deposits With New App

Citigroup, faced with lackluster deposits from individual customers, is trying to ramp up that side of the business by rolling out a new app in the third quarter of this year.

Reuters, citing David Chubak, head of global retail banking and mortgage, reported the bank is hoping that it can boost deposits without having to open new branches, make a buy or offer better rates than competitors. “People are willing to switch to a bank that is able to provide this kind of mobile-first experience,” Chubak told Reuters, pointing to internal research the company conducted.

The app doesn’t have a name yet. While Chuback said Citigroup could open branches over time in regions where it will help boost its wealth business, it currently isn’t planning to expand its physical locations. Citigroup is in cost-cutting mode on the consumer banking side of the business, with its chief executive vowing to slash costs in its consumer banking unit by $1.5 billion by 2020. Citigroup is betting its technology, brand name and marketing to its 120 million U.S. credit card customers could result in more deposits coming its way. Reuters noted it could offer rewards for new deposits to credit card customers.

The efforts on the part of Citigroup could prove to be very important, given it’s behind rivals in terms of profitability. Citigroup, according to Reuters, controls 4 percent of U.S. deposits — while JPMorgan, Bank of America and Wells Fargo have 11 percent of the U.S. banking deposits. While it has enough to fund its loans, it only makes one-third as much revenue as JPMorgan and Bank of America off of the deposits, Reuters reported, citing Peter Nerby, a banking analyst at Moody’s Investors Service. Citigroup’s deposits also cost it more than rivals because it has more institutions and wealth customers that want better rates. The report noted it paid 0.81 percent on U.S. interest-bearing accounts last year. Meanwhile, the other banks paid under 0.30 percent.

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