Citigroup hopes to grow deposits digitally

NEW YORK: Citigroup Inc is facing a unique dilemma among the four largest United States banks — it is light on deposits from individuals, an important funding source that costs little and tends to stick around.

While big rivals grew deposits dramatically after the 2007-2009 financial crisis from their broad networks of branches, Citigroup backed out of all but six US cities and closed one-third of its branches.

The bank is now trying to up its game with a new app it plans to begin marketing in the third quarter.

Executives hope it can lure deposits without opening new branches, acquiring a rival or beating competitors’ rates — three ways to collect deposits with their own costs and risks.

“People are willing to switch to a bank that is able to provide this kind of mobile-first experience,” said David Chubak, head of global retail banking and mortgage.

The app, which does not have a name, will augment the bank’s push to expand its wealth management business, he said.

Competing for deposits is important as interest rates rise. When banks start reporting second-quarter results on Friday, investors will be closely watching deposit levels and what they cost.