Citigroup Inc (NYSE:C) is launching another solution that will enable its American Airlines cardholders to make digital deposits. This new savings account will be dubbed ‘Citi Miles Ahead savings account’.
This online savings account is deemed high-interest earning and is set to be launched early next year. In the effort of luring the customers to open this account, Citigroup promises up to 50,000 miles once the user signs up as well as 25% miles boost when they use the given card. However, this is capped for the first $50,000 the user spends.
Citigroup’s major competitors, Bank of America and J.P Morgan Chase, have leveraged their many physical locations to boost their bank deposits, as well as the use of credit cards. To counter this competition, Citigroup has ventured into digital solutions geared towards increasing its deposits.
Citigroup’s Digital Deposits Strategy
The digital banking strategy has been working quite well for Citigroup, as they have already reported digital deposits totaling to $2 billion in the third quarter. Other tactics the bank is using includes cash-backs and rewards points on the bank’s executives and Citi-branded cards. This may also soon extend to other partner-branded products.
Citi Group’s CFO, Mark Mason, said that the bank is quite invested in technology that enables them to obtain and mine their customers’ data. They then use this data to create personalized value propositions that meet the demands of their customers. He said that “For example, we know which of our card customers enjoy and prefer our ThankYou rewards programs and which of our card customers respond to many of the other programs that we offer from a rewards point of view, so we’re able to create packages for them that reward them with benefits they respond to.”
Notably, this digital online savings solution will be available only in locations where Citigroup has no physical presence. This comes after the bank offered American Airlines a solution that enables them to pay their debts in fixed payments.
The bank has not yet decided on the interest rate to offer on the Citi Miles Ahead savings account. The Citi Accelerate online savings account that was launched early this year offered an interest rate of 2% per annum.
American Airlines also earns revenue through its loyalty program and partnership with Citigroup. Last year, this revenue amounted to 10% of its sales.