After closing a number of its branches Citi is now developing a virtual bank offering and intends to go 100% digital, according to CFO John Gerspach:
Citigroup Inc (C.N) is laying the foundation, through a growing network of mobile banking tools, to support the launch of a national digital consumer bank sometime within the next three years, its chief financial officer said on Tuesday.
“I am not making an announcement right now, but I would be really disappointed if it was anything close to being three years away,” CFO John Gerspach said at an investor conference. “We really are laying the groundwork for having a national digital bank.”
Gerspach also said first quarter markets revenue was up by a “low-to-mid” single digit percentage from a strong quarter a year earlier.
Citigroup operates branch offices for individuals in only six big U.S. cities, but has a national franchise in consumer credit cards. After the 2007-2009 financial crisis, it retreated from offices in smaller cities and the state of Texas to reduce costs.
Gerspach said the bank does not want to begin marketing a national digital bank to consumers until it is sure it can digitally open and service accounts over mobile phones and computers to the satisfaction of customers.”
Of course success for this strategy will require more than technology, it also needs to be accepted by the consumer. The Mercator CustomerMonitor Survey Series data collected annually from 3,000 consumers over the age of 18 suggests that a majority of consumers aren’t ready for this. The survey conducted in 2016 found that only 6% of respondents considered online/phone/mail-only banks their primary financial institution.
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
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