Citi is offering customers higher savings rates to encourage them to bring more of their money to the bank. This move is part of the lender’s strategy to deepen client relationships. As of June 30, the New York City-based lender held about $900.9 billion in domestic deposits, representing approximately 4.7% of the U.S. deposit market share, according to Federal Deposit Insurance Corp. data.
“With the industry being so focused on promotions, you see a lot of money in motion,” said Kate Luft, Citi’s head of retail banking. “This is a disruptor to stop money in motion.”
Attracting Assets
The bank, which holds $2.6 trillion in assets, aims to attract more of its customers’ $3 trillion in assets not currently held at Citi. The premium boost, announced last month, is designed to encourage clients to consolidate their finances with the bank. Clients often have their financial products scattered across different institutions, as one noted, “Clients ‘have savings over here, they have their direct deposit here, and they might have their 401(k) over there. No one actually wants that,’ she said.”
Citi has introduced relationship tiers, similar to those used by airlines, based on a customer’s deposits and investments. These tiers range from $30,000 to $1 million-plus in combined average monthly balance. Luft emphasized that the bank is rewarding behaviors clients are already engaging in, such as investing or banking, but not always with Citi.
The bank will offer Citigold private clients a 4.35% annual percentage yield, Citigold customers 4%, and Citi Priority clients 3.5%. To qualify, customers must also have a checking account and meet certain direct deposit or average balance requirements. This tiered approach is intended to simplify the bank’s retail products and encourage consolidation.
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Retaining Clients
Luft believes customers are tired of constantly moving their money around to capture promotions. She said, “No one actually wants that,” but banks haven’t given them a reason to consolidate their banking, lending, and investing in one place. Citi’s strategy aims to provide that reason by offering a full wealth strategy rather than short-term promotions.
The premium boost is intended to attract new retail bank clients and retain and grow assets from existing clients. Citi’s third-quarter results suggest these changes are having a positive impact. In the bank’s wealth unit, Q3 average deposits rose 3%, partially offset by a decline in Citigold and retail banking deposits. However, the shift from cash to investments is significant, as about 85% of the bank’s investment assets come from deposits, which Luft described as “a great thing.”
The wealth unit logged $38 billion in net new investment assets, and Citigold and retail bank revenues rose 16%, to about $2.3 billion, fueled by higher deposit spreads. This growth highlights the success of Citi’s strategy in encouraging clients to move more of their assets into investment products.
Citi is also focusing on younger customers by waiving fees for everyday consumer checking account customers 23 and younger and has rolled out a new digital direct deposit enrollment. These initiatives aim to capture a broader segment of the market and build long-term relationships with younger clients.
Citi is also revamping its small business banking value proposition, set to launch in the second half of 2027. This initiative is part of the bank’s broader strategy to enhance its offerings across all customer segments, ensuring that Citi remains competitive in a rapidly evolving financial system.
