[Exclusive] Financial Sector's Battle to Attract 'Citi Customers'... "Get Preferential Interest Rates When You Register for Open Banking"

Hana Bank Offers Preferential Deposit Rates to Citibank Customers
2.0% for 1-Year Deposit with Open Banking Subscription
Approximately 0.8~1.05%P Higher Than Existing Rates

Seoul Jongno-gu Korea Citibank Headquarters./Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Song Seung-seop] Financial companies are fiercely conducting behind-the-scenes efforts to secure customers of Korea Citibank, which is withdrawing from consumer finance. While it is burdensome to attract loan customers due to the household loan volume regulation, they believe that deposit customers with solid high-quality assets are advantageous for future expansion.

According to the financial sector on the 8th, Hana Bank recently decided to offer preferential interest rates to Citibank customers. The method is to provide preferential interest rates when Citibank customers register open banking with Hana Bank. This applies not only to new customers who have never transacted with Hana Bank but also to existing customers who used both Hana Bank and Citibank simultaneously.

The target product is Hana Bank's High Unit Plus Time Deposit. It offers an interest rate of 2.0% for one year. For 3 months, it is 1.5%, and for 6 months, it is 1.7%. The existing interest rates for this product as of this day are 3 months (0.7~0.75%), 6 months (0.8~0.85%), and 12 months (0.9~0.95%). The lump-sum payment at maturity is 0.05 percentage points higher than the monthly interest payment method. Considering this, a preferential interest rate of 0.8% to 1.05% points is given. The fixed interest rate is not guaranteed and may change depending on future funding rate increases.

Hana Bank explained that this is to secure base customers through open banking services. A Hana Bank official said, "Not only Citibank but also previously, we have conducted similar marketing to secure new base customers," and added, "This preferential interest rate benefit is also implemented to support branches in attracting new customers to open banking, which is an important business in the banking sector."

Financial Sector's Strategy to Attract 'Citibank Asset Owners'

Other financial companies are also considering ways to recruit Citibank customers. They are especially focusing on attracting Citibank asset customers. Commercial banks with branches near Citibank branches have issued guidelines to strengthen management of overlapping asset customers. Customers using asset management services often distribute funds across multiple banks, and the strategy is to incorporate these customers from Citibank into their own base customers.

Other financial companies that have not yet started related marketing are also reportedly issuing related policies through individual branches or branch managers. Some other commercial banks have instructed certain branches to check if customers have Citibank deposit accounts and suggest switching accordingly.

Financial companies are paying attention to Citibank customers because there is a high possibility of defection during the domestic consumer finance liquidation process, and many of them are high-quality customers. Currently, Citibank's deposit products include mainly demand deposits, time deposits/savings, housing subscription savings, check cards and cash cards, and foreign exchange services. Existing products can be used until cancellation or maturity, but if staff are reduced or branches are downsized in the future, consumer inconvenience will inevitably increase. Moreover, Citibank is considered to have solid asset management customers even within the domestic financial market. Citibank started asset management services for high-net-worth individuals in Korea for the first time in the 1980s.

However, it seems that marketing or sales targeting Citibank borrowers in the loan sector is not being conducted. This is because they must comply with household loan volume regulations. With little remaining annual volume limit at the end of the year, there is no incentive to increase loan assets. At the end of last month, the household loan growth rates of the four major commercial banks?KB Kookmin, Shinhan, Hana, and Woori Bank?were between 3.8% and 4.35%.