Just by visiting certain retailers, people can earn "Karma Points," a type of reward points that are not tied to any financial activity and can be redeemed to make charitable donations, on Citi's dime.
For now, Citi said the main benefit is promoting its brand: users need not be Citi customers, it's free and the company's logo appears all over the screen.
Analysts said there are benefits from linking Citi's name to charitable giving, and the service shows how financial companies are looking for new ways to take advantage of mobile phones' location-aware capabilities.
However, they said the real benefits from the technology could come from incorporating the bank's own rewards program or adding payments features — services that could generate revenue, and which the banking company is already considering.
"This is a home run in terms of an early venture test," Jeff Semenchuk, a managing director and the head of Citi growth ventures, said in an interview. "As a marketing program, we've seen enough to say this is really impressive."
The app, Causeworld, went live at the end of December and was an immediate hit with consumers. At one point it was ranked among the top-10 most-popular downloads in two categories on Apple Inc.'s app store and it has already generated more than a quarter of a million dollars in charitable donations.
Causeworld is available for both Apple's iPhones and handsets that run on Google Inc.'s Android operating system.
This basic concept — awarding points to users based on specific activities — is comparable to many banks' rewards programs, including Citi's Thank You Points, and Semenchuk said these parallels have prompted Citi to look for additional mobile services that could springboard off the Causeworld app.
"Could we connect Thank You Points, and could Thank You Points be converted to Karma Points? Absolutely. That's something Citi could do that's unique to our customers," he said. Though there are no programs in the works now, "we'll explore what is relevant," Semenchuk said.
Causeworld was created by shopkick Inc. of Palo Alto, Calif. The software uses phones' built-in GPS capabilities to determine a user's location. When the app recognizes that someone is near a participating retailer, they are awarded Karma Points. People do not have to spend money at the store, and in many cases it's possible to score the points simply from being within walking distance of the store.
Banks and merchants have been talking about location-aware marketing for years, but most of the ideas floated to date have involved pushing coupons to consumers' phones. In one often-discussed model, a bank's merchant customers would be able to deliver offers to people through the bank's mobile banking software.
Semenchuk said this earlier idea makes the bank and the merchant the center of the equation, and might irritate consumers who could be inundated with unwanted offers.
But with Causeworld, consumers have to opt-in by downloading the software and by launching the app when they want to earn Karma Points. Participating merchants won't know when people are going to their stores to earn Karma Points, and Citi's presence is only in the branding. There are no explicit pitches for Citi products.
"This has to be open to the whole ecosystem of customers," Semenchuk said. "You sort of need to let the customers and consumers come to it."
