The Customer Effect

Citi sees retail bank revenue growth as it pushes on with digital plans

  • Citi continues to grow its retail revenues despite an ambitious plan to trim its branch footprint
  • Future acquisitions won't be banks with physical branches; they'll be focused on generating organic growth through digital channels
close

Email a Friend

Citi sees retail bank revenue growth as it pushes on with digital plans
Despite Citi's shrinking branch presence, retail banking revenues are growing. Citi is staying the course on a multi-year branch reduction strategy. The bank shrunk its North American branch network four percent over the last year, according to its earnings report for the fourth quarter of 2017. Over the past three years, it reduced the number of branches by 16 percent and downsized existing ones -- moves that saved the bank $400 million, said Stephen Bird, CEO of global consumer banking, at Citi's investor day in July. With 694 branches in the U.S., down from 723 in the same quarter in 2016, Citi has the smallest footprint of any major American institution.

On Tuesday Citi reported 14 percent growth in its retail banking revenue to 1.2 billion from the same quarter in the previous year on checking deposits, investments, loans and commercial banking activity. In the same period, digital users grew 13 percent to 17 million, and mobile users grew 21 percent to 9 million compared to the same period the year before. Citi isn't interested in acquiring other banks, said CFO John Gerspach said on its earnings call Tuesday; mergers would bring additional branch space as the company trims its physical footprint. Future acquisitions will be aimed at generating organic growth through digital channels. Citi reported revenues of 17.3 billion. Operating expenses changed 1 percent compared to last year ($17 billion), and higher volume-related expenses were offset by efficiencies and the wind-down of legacy assets. "We're making investments in digital, and growing our franchise through digital rather than the physical footprint," he said.
Branches are consolidating locations with lower servicing volume, opening in higher growth areas and renovating existing branches and ATMs. More importantly, they’re evolving into more compact, digitally oriented spaces that incorporate new technology and help branch employees focus on improving the customer experience. Most banks' branch networks have shrunk in size thanks to rising costs of real estate, and many have disappeared entirely, according to data from the Federal Deposit Insurance Corporation. Chase reduced its branch presence by 190 locations, a 3.4 percent decline, from 2012 to 2016. Wells Fargo closed 98 branches, a 1.6 percent decline in the same period. Its peers are even more aggressive. Bank of America closed 243 branches (16 percent) in that period.
Instead of a legacy teller model, over the past year, the bank has rolled out "digital branches," which contain workbenches with computers that let customers review their finances, with the staffers on iPads on hand to assist as needed.     

0 comments on “Citi sees retail bank revenue growth as it pushes on with digital plans”

Outlier OpinionsMakers

The Customer Effect

Gen Z’s relationship with money is complicated: New research on Gen Z’s debt, investments, and financial literacy

  • Gen Z's relationship with finance is complicated. Some of their habits make them seem wise beyond their years and others.. not so much.
  • 41% of Gen Z report having $2000 in debt or lower. At the same time 19% are unaware of their credit scores.
Rabab Ahsan | November 01, 2023
The Customer Effect

‘We don’t make that much money on them’: The opportunities and gaps in banking with Gen Z

  • While Gen Z is estimated to have $360 billion in disposable income, only 33% of them are using a financial provider. 
  • David Donovan, EVP of Publicis Sapient, talks about the opportunity Gen Z represents for FIs and why they are failing at capturing the demographic's attention.
Rabab Ahsan | June 30, 2023
The Customer Effect

How are consumer habits and spending changing due to economic turbulence?

  • Economic turbulence is changing consumer spending.
  • 66% of people say that the current economic situation is making them reconsider how much they put aside for their emergency fund, while others are pushing away travel plans and dipping into their 401k.
Rabab Ahsan | April 27, 2023
The Customer Effect

22% of Americans think ‘net worth’ only applies to wealthy people

  • American consumers are more aware of celebrity net worth than their own.
  • Younger consumers, those heading towards retirement, and women are the most likely to not keep track of their net worth.
Rabab Ahsan | April 20, 2023
The Customer Effect

Trouble in paradise: How layoffs are affecting consumer relationships

  • The recent wave of layoffs is impacting consumers’ relationships.
  • 80% of those who were laid off themselves would consider leaving their spouse if they got laid off, too.
Rabab Ahsan | April 14, 2023
More Articles