Game on: Citizens to finance new Microsoft Xbox program

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Citizens Financial Group will provide point-of-sale financing for Microsoft’s new Xbox All Access program through a partnership also involving Amazon and the tech firm LiftForward, the Providence, R.I., bank said Monday.

Under the agreement, the $164.4 billion-asset Citizens will provide an installment loan to consumers who want to purchase any of three select Xbox game consoles and a 24-month Xbox Game Pass, a subscription service that offers a rotating roster of titles. Consumers who opt into the program can also get early access to the next Xbox model, dubbed Project Scarlett, which is scheduled to be released at the end of 2020.

By tying it to a recurring gaming subscription and the future launch of a next-generation gaming device, it may stimulate more interest in the product. Console hardware sales have declined in the past year because consumers are waiting for the next-generation models to become available.

Though the loans carry a 0% APR, Citizens will earn a portion of the sales made through the program, said Brendan Coughlin, head of consumer banking at Citizens. He said the retailer gives up a small margin on the product, but can offset that with higher sales volume, particularly for younger consumers who may be more comfortable with installment loans than credit cards.

“When you look at millennials and Gen Z, they are heavily gravitating to these subscription models where they can have the flexibility to manage their financials over time,” he said. “This is designing a program in the way that customers are now thinking about their financial lives.”

Faced with an increasingly tough revenue environment, banks have become creative about finding growth in new places. Point-of-sale lending in particular has taken off in recent years, enabled by technology that lets lenders make loans more quickly and cheaply. Consumers are increasingly interested in such loans.

“Many consumers — especially younger ones — prefer the discipline and simplicity of an installment loan,” said Leslie Parrish, a senior analyst at Aite Group.

Fifth Third Bancorp, Regions Financial and Synovus Financial all partner with GreenSky, a fintech that offers point-of-sale loans for contractors, medical firms and specialty retail. Citizens is also the exclusive point-of-sale lender for iPhones at Apple stores and It has a similar partnership with Vivint, a home security provider, and a pilot program with ADT, another home security firm, which it announced early this year.

Citizens’ partnership with Xbox also involves Amazon, which is the sole retailer offering the program, and LiftForward, the tech firm that helped to develop the product, which is called the Xbox All Access Program.

“What is interesting in this case is the number of parties involved in the partnership to bring this offer to consumers,” Parrish said.

Currently, the program costs between $19.99 and $30.99 per month, depending on the console the consumer purchases. It also includes a membership to Xbox Game Pass Ultimate, a subscription-based service similar to Netflix that gives users access to over 100 games. (The Game Pass typically costs $10 a month on its own, while the consoles range from $200 to $400 in price.)

Additionally, consumers who finance their Xbox purchase through this program will get an early opportunity to upgrade to Project Scarlett late next year. That console is expected to go head-to-head with Sony’s PlayStation 5, which is also slated for release next year.

Xbox has not said what Scarlett will cost, but the Xbox One X, the top line among its current models, currently retails for $399. Most observers expect that Scarlett, which comes with substantially improved hardware, to cost at least that much at launch.

Installment loans may be a way to help soften the blow of a potentially high price tag. Microsoft’s launch of the Xbox One in 2013 was marred by a $500 price point, which helped Sony’s cheaper PS4 rapidly gain market share. Yet installment loans may help reduce any sticker shock concerns.

The sales of gaming subscription services have also helped Microsoft and Sony to offset declining hardware sales.

Coughlin of Citizens said partnering with Microsoft in this way ensures repeat business as many customers will eventually want to upgrade to newer consoles. He said this differentiates the partnership with Microsoft from many other point-of-sale lending relationships where the consumer just makes a one-time purchase.

“This is a VIP, repeat purchase, long-term relationship the consumer is ultimately going to have with Microsoft and the bank,” he said. “We think this is the beginning of a very long relationship with Microsoft and we hope there will be expansion opportunities for this customer base in lots of different ways down the line.”

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