For Citi, cards are driving multi-product relationships

Photographer: Victor J. Blue/Bloomberg

To Citibank, the world’s largest credit card issuer, cards are driving revenue and deeper relationships with the brand. On Tuesday, the bank reported that, in North America, revenue from branded cards grew 11% to $2.3 billion.

According to Mark Mason, Citi’s chief financial officer, cards are important customer acquisition drivers for other areas of the business, including retail banking products. “The positive momentum continued with a strong contribution from both traditional and digital channels, as we leverage our brand in scale and credit cards to drive deeper multi-product relationships,” he said in a third quarter earnings call.

Meanwhile, the bank is seeing growth in deposits raised through digital channels, with nearly $2 billion in digital deposits in the third quarter, bringing the bank’s year-to-date total to more than $4 billion. Nearly two-thirds of deposits in the third quarter were generated from outside of the existing branch footprint. Of these, roughly half were card customers who didn’t have a prior relationship with the bank, Mason noted.

See also: In the battle for top of wallet, Citi adds instant card rewards redemption

Accordingly, through card transactions, the bank can get to know would-be customers and pitch relevant products and services. “Our experience today gives us confidence in our digital capabilities and engagement model and provides a solid foundation for deepening these relationships over time,” said Mason. Retail banking revenues, at $1.3 billion, were down 2% year over year, as deposit volumes were offset by “lower deposit spreads,” he noted.

The bank is able to reach card customers who aren’t already retail banking customers by studying their activities and preferences. Using this information, Citi is able to tailor offers that are relevant to these prospective customers. “As we think about investments we’ve made in technology and our ability to to mine the data that we have on our customers, we’re able to create value propositions that they’re likely to respond to and open up a retail banking account with us,” said Mason. Based on customer attributes and preferences, the bank can craft “packages” of reward benefits if they open a Citi retail account.

Over the past year, Citi has been evolving its cards and rewards strategies. In June, it rolled out an instant rewards redemption feature, a day after the bank eliminated benefits from many of its cards effective Sept. 22, including a “price rewind” feature for online purchases along with trip cancellation and interruption protection.