Dive Brief:
- Citi is replacing its standard account packages for U.S. retail customers with relationship tiers, a structure where increasing account privileges are awarded based on how much customers have in their banking and investment accounts, the bank announced Wednesday.
- The shift comes amid Citi’s broader focus on wealth management. Under the new setup, tiers will operate like airline or hotel reward categories. As a balance grows, the customer will automatically move into new relationship tiers, with additional benefits, including waived service fees and access to financial planning, the bank said.
- Citi will begin converting existing customers to the new structure next year.
Dive Insight:
The new structure represents an emphasis on people rather than products, Craig Vallorano, Citi’s U.S. head of retail banking, told Bloomberg. “We’re moving from an old-school product-package approach, which was competitive but static,” Vallorano said. “This structure really opens it up to be relationship-driven as we originate relationships, not accounts.”
The tiered system has three levels: Citi Priority, which begins with a combined monthly average balance of $30,000; Citigold, which begins at $200,000; and Citigold Private Client, which begins at $1 million. Customers can enjoy tier benefits when they open an account, but they must meet the balance range within three calendar months to retain their status.
With a focus on higher tiers, Citi is aiming to boost its wealth-management business, particularly after hiring Andy Sieg, the former president of Merrill Lynch Wealth Management, away from Bank of America. A relationship-based approach will likely help boost referrals from Citi’s retail channel to wealth management: The bank reported 25,000 referrals from retail branches into its broader wealth business in the first five months of 2023.
As Citi angles toward wealthier customers, it’s also simplifying and eliminating fees for those who don’t qualify for relationship tiers. For example, monthly account fees for checking accounts are waived if customers make at least $250 in direct deposits every month, including Venmo and Zelle transactions. The bank also phased out overdraft and returned-item fees last year.
Citi also will link family accounts, which can unlock higher relationship tiers faster by combining a customer’s average monthly balance with those of eligible family members who live with them in the same household.
“These latest changes are designed to create a more seamless experience for our customers and make it easier for them to get personalized advice and access their finances,” Vallorano said in a statement.
