Citizens to launch online-only bank in bid to boost deposits

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Citizens Financial Group in Providence, R.I., is launching an online-only bank aimed at boosting its consumer deposit base, the company said Monday.

Deposits gathered through Citizens Access, the new online bank, will help fund the $153.5 billion-asset Citizens’ other retail offerings, like student loan refinance, merchant finance and home equity lending.

“Over the past several years, we have invested heavily in data and analytics to better understand and react to customer needs, and we are excited to engage with them in one of our industry’s fastest-growing deposit channels,” Brad Conner, Citizens' head of consumer banking, said in a press release. “Over time we believe this will better position the bank to further innovate, acquire new customers and deliver expanded digital capabilities.”

Over the past year, regional and national banks have increasingly begun rolling out digital, direct-to-consumer offerings. PNC Financial Services Group, BBVA Compass and Citigroup are among those that launched their own digital loan products both to increase consumer lending and keep pace with fintech lenders that popularized those online loans in the first place.

Now, Citizens is joining the ranks large or regional banks launching digital banks in an effort to bolster deposits. Others include JPMorgan Chase, Goldman Sachs and MUFG Union Bank.

A spokesman said that Citizens Access will have no lending component, and it will offer savings accounts and certificates of deposit. Citizens Access is expected to launch next quarter and the bank expects it to generate rough $2 billion of deposits this year, according to an investor presentation scheduled for Tuesday that was posted on Citizens' website midday Monday.

Deposits, and particularly low-cost deposits, are becoming ever more important as banks strive to keep funding costs down in a rising rate environment. Citizens said recently that its non-interest-bearing deposits increased by 2% in the first quarter when compared with a year earlier.

Citizens Access is expected to officially launch in the third quarter.

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