Citi Appears to Be Pursuing Deal with Square Cash

  • JJ Hornblass
  • June 29, 2016
  • 6

© Can Stock Photo Inc. / rosselladegradiIs Citigroup going to partner with Square to offer the startup’s peer-to-peer payments service to Citi customers?

That’s the implication from a recently published article in Fortune.

Square Cash was launched by Square in 2013 for P2P payments. The service is available in the U.S., and for both personal or business use. When Square went public in 2015, it said it had processed more than $1 billion of payments through Square Cash.

Bank Innovation has requested a comment from Square, which has a market capitalization of about $3.2 billion. The company’s stock has lost nearly 30% of its value so far this year.

What is interesting about the news is that Citi has offered Fiserv’s Popmoney P2P payments service since 2010, when it was a product of Cashedge, a company Fiserv since purchased. Citi offers Popmoney through its desktop and mobile banking platform.

Other major banks have been advancing their P2P payment capabilities in recent months. In fact, Wells Fargo & Co. announced just today that it would soon go live on ClearXchange, the bank P2P network that already includes Bank of America, JPMorgan Chase, Capital One, and US Bank.

The seeming effort to enhance its P2P payments is part of a broader revamping of Citi’s fintech portfolio, following the creation of Citi Fintech last October, headed by Heather Cox. The bank has been working on a new mobile platform since then, and now it appears that it will be released in the fourth quarter, according to Fortune.

Notably, the new iteration will include facial recognition, as well as other forms of biometric authentication, like touch and voice. Citi has been working on an eye-scan authentication for its ATMs since 2015. And like other banks, it is also said to have an Amazon Alexa feature in development.

The new Citi banking app will also feature an open API. From the article:

Citi’s new mobile app will have an open architecture in order to give Citi’s customers access to the best functions of the smartest fintech apps. Imagine the app store if it were solely for banking services—all accessible with a Citi sign-in on your phone.

Citi is purportedly negotiating with several fintech startups to integrate their technology into Citi’s offerings. Such integrations have been a challenge for Citi in the past. More than 30 startups have come through Citi’s fintech accelerator in Israel since its launch in 2013. As we understand it, not a single startup’s technology has been incorporated into Citi’s offerings.

But Citi has clearly seen the fintech light. According to the bank’s own research, 36% of Citi’s sales of consumer banking products come from one of Citi’s digital platforms, as compared to around 15% at other big banks. Over the past year Citi’s number of mobile users has climbed nearly 26%, the bank told Fortune.

“We’ve got some new religion around here,” Cox told the magazine.

 

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JJ started the first iteration of Bank Innovation back in 2007, and has been working on it ever since. He also serves as President & Chief Executive Officer of Royal Media, Bank Innovation’s parent. He founded Royal in 1995 and oversees all aspects of the New York-based diversified media company. Prior to forming Royal, JJ was on the editorial staff of American Banker, the daily newspaper, and worked as an editor of a business magazine in Hong Kong. As a reporter and editor, he has won journalism awards from the National Press Foundation, Newsletter & Electronic Publishers Foundation, and the Reader’s Digest Foundation. He has a BS in Economics from Yeshiva University and a Master’s from the Columbia University Graduate School of Journalism. He was also a Fellow at the University of Wisconsin-Madison Graduate School of Banking. He lives in New York City with his wife, two daughters, and son. He counts among his accomplishments one New York City Marathon, two New York City Triathlons and the 2010 Father’s Day 5K, the first race he ever ran with his daughters. He can be reached at hornblass@gmail.com or 212-564-8972.

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