Payments and Embedded Finance Evolution: The Citi Experience

Jim Marous (00:12):

Welcome to another episode of Banking Transformed, the podcast that dives deep into the trends, innovations, and strategies shaping the future of banking. I'm your host, Jim Marous, owner, and CEO of the Digital Banking Report and co-publisher of The Financial Brand.

Jim Marous (00:28):

Embedded financial products and flexible payment solutions are reshaping how consumers interact with banking services. As commerce increasingly shifts towards integrated experiences, the ability to seamlessly embed financial services from a buy now pay later option to comprehensive lending solutions directly into the payment journey have become critical for merchants and financial institutions.

Jim Marous (00:54):

Terry O'Neill, Head of Connected Commerce for Citi Retail Services and Head of Strategic Partnerships for Citi U.S. Personal Banking, joins the Banking Transformed Podcast to discuss how the convergence of traditional banking capabilities with modern digital experiences creates new growth opportunities while challenging established business models.

Jim Marous (01:17):

The discussion explores the impact on consumers, merchants and financial institutions as we move toward an increasingly integrated financial ecosystem. Payment ecosystem is evolving from the physical to the digital world faster than any other banking component.

Jim Marous (01:34):

New products and services are being introduced that are more seamless, embedded and customer centric. So, Terry, you've been in the payments area at Citi Bank for over two decades after spending some time at Visa. Could you go into a little bit about your background?

Terry O’Neil (01:51):

Absolutely. First of all, Jim, thanks for having me today. I've been in payments for a little bit over 30 years, and I've had an opportunity to work across the entirety of the transaction. I spent a bit of time early in my career on direct-to-consumer payment products, as you referenced.

Terry O’Neil (02:08):

Having worked at Visa, I was on the merchant side of the transaction and then over the past 24 years at Citi, I've had an opportunity to work within direct-to-consumer payments as well as the past 10 years in Citi retail services, which is our point of sale lending division, where we provide private label and co-brand products to some of the industry's largest retailers.

Terry O’Neil (02:31):

So, I've had an opportunity to really work across the full spectrum of the transaction, rather on the merchant side or on the consumer side. And that served me very well as I've moved into the embedded payments and strategic partnership space at Citi.

Jim Marous (02:45):

It's interesting, the consumer payment space has really evolved during your whole career path, but really is ramped up almost like a snowball going down a hill where it picks up more and more speed and gets bigger and bigger, especially in the last few years. What trends have you seen in the past few years and what do you see driving growth, let's say, just in the next 12 months?

Terry O’Neil (03:07):

I would say what I've seen over the past couple of years is the consumer is squarely in the driver's seat. As we've spent a lot of time talking to both merchants and consumers, we've heard a lot about consumers really seeking flexibility when they're shopping. It really comes down to them wanting to understand how much an individual purchase is going to cost them on a monthly basis. They're looking at that to really try to understand how that purchase fits into their budget.

Terry O’Neil (03:35):

Because of that demand for payment optionality and payment flexibility when consumers are shopping, we've really seen that drive a lot of evolution in point-of-sale payments. You see a lot of alternative payments coming into the consumer sales journeys and really embedded into the merchant sales journeys and we've seen a tremendous amount of growth there. It's really fueled by consumers seeking that optionality and that flexibility.

Terry O’Neil (04:04):

Based on the research that we've done, we really think that it comes down to a consumer wanting to understand how larger or more unexpected purchases or splurge purchases might fit into their monthly budget. So, they're making the decision less about something costing $500 or $1,000 or $2,000, and they're really looking at it based on how much it costs them per month and are the payment terms that fit within their budget available to them when they're making that purchase decision.

Jim Marous (04:34):

So, how does that fit in with the overall customer payments experience? Because we've already seen that in the credit card area, and in credit in general, the numbers are really escalating pretty fast as far as how much people are taking on debt and we're starting to see what usually happens when that happens is higher levels of past due and overdue payments.

Jim Marous (04:58):

How does embedding the services help from the perspective of helping the consumer manage their own credit use, but also from Citi perspective, helping so that you have customers that they're going to pay you first, for lack of a better term.

Terry O’Neil (05:15):

I think it comes down to a couple of things, Jim. I think it comes down to making sure that there is an issuer in the space that understands point of sale lending. As I said, Citi retail services has been in point-of-sale lending for nearly 40 years and we've invested an awful lot in understanding how to underwrite a consumer when they're trying to make a purchase.

Terry O’Neil (05:39):

Because our credit products have always been embedded in merchants’ sales journeys, and because we're really a business to business to consumer issuer, we look at a couple of different things when we are moving a consumer through the application.

Terry O’Neil (05:56):

First and foremost, are we supporting our merchant partners in executing that transaction? Are we helping them drive sales completions and average order value? Because that's really how the merchant thinks about embedding credit into their point of sale. Are they helping consumers buy what they need when they need it at terms that are favorable to them or terms that fit within their budget?

Terry O’Neil (06:20):

For us, it comes down to a couple of different things. It really is understanding how to underwrite in the purchase journey. We're making a split-second credit decision on a consumer so we use a number of tools that include requested sale amount, so we understand how much that consumer is trying to spend. We also look at ability to pay, and we fully underwrite the consumer, which is different than a lot of what the fintechs do with pay in force strategies.

Terry O’Neil (06:51):

With Citi Pay our embedded payment products, we're underwriting the consumer, we're using tools like requested sale amount so that we understand what the consumer's trying to purchase, we understand what their purchasing power is. We are checking the bureau and we are reporting that line to the bureau so other lenders can have a more fulsome view of the obligations that the consumer is creating.

Terry O’Neil (07:18):

I think the other very unique thing about Citi Pay, which is our embedded payment product, is that a customer is approved for a revolving line if it is the digital line of credit that they apply for. Within that revolving line, there are different payment terms that they can qualify for, whether it's monthly payment plans or deferred financing promotions, promotional financing promotions, that account can accommodate up to a hundred different strategies.

Terry O’Neil (07:50):

So, a consumer can purchase across any merchant within the Citi Pay ecosystem of merchants. They'll see all of their purchases on one statement, they'll see all of the different payment plans that they have in one statement, and that'll all be rolled into one monthly payment on one statement.

Terry O’Neil (08:08):

So, from a consumer perspective, and when you think about responsible lending or responsible borrowing, rather than being at risk of stacking a lot of different paying for strategies where you may lose track of the monthly obligation that you're creating within Citi Pay, you can view them all in one place and understand how many different payment strategies you've created. So, we really believe that the combination of truly understanding how to underwrite in the point of sale.

Terry O’Neil (08:39):

Using tools like requested sale amount and other data elements to understand what type of purchase the customer's attempting to make but also using tools that we've used for nearly decades within Citi Retail Services around understanding ability to pay and other credit obligations, really helps us ensure that we adhere to our tenets of responsible lending.

Jim Marous (09:04):

So, Terry, it's interesting what Citi has done and the advancements you've made with Citi Pay and digital integration of not only the services, but the consumer's experience in that. What can another financial institution, the financial institution, the mid regional or even more of a community financial institution, learn from your experience in their desire to deploy better payments and better lending services?

Terry O’Neil (09:33):

My first piece of advice would be to put the consumer and the merchant at the center of everything that you do. At Citi we recognize that we have two consumers. We have the merchant who are our partners, and we have the consumer who is the end user of our products. You need to serve both of those constituents, and you need to understand where there's an intersection between the two.

Terry O’Neil (09:56):

As I said, we operate within our merchant partners sales journeys. If we can't make it easy and intuitive to integrate credit into the merchant sales journeys, we can't offer credit to the end consumer.

Terry O’Neil (10:10):

So, when we were building Citi Pay, we were very sure to spend an awful lot of time with our merchant partners understanding how they thought about point-of-sale lending, understanding how they thought about payment strategies.

Terry O’Neil (10:24):

We also spent a lot of time investing in consumer research to understand what was motivating consumers to take alternative financing strategies when they were purchasing. The intersection of those two pieces of information really informed our build for Citi Pay.

Terry O’Neil (10:42):

What we learned was that, obviously, as I was saying earlier, customers were looking for choice and flexibility. What that translated into consumers telling us was that if a merchant doesn't have choice and flexibility in the point of sale, they may look elsewhere for that purchase because they're really trying to understand how that purchase fits into their budget.

Terry O’Neil (11:01):

From a merchant perspective, what we heard from them loud and clear was, “You need to make it easy for me to integrate credit and you need to move the consumer through the application quickly, make a split-second credit decision and provide me with payment credentials instantaneously so that you don't interrupt my sale.” And that we knew from the decades that Citi Retail Services has been in point-of-sale lending.

Terry O’Neil (11:24):

We've always said, you never want to be the partner that creates a line at Macy's or Best Buy on Black Friday. You never want to be the merchant that creates that spinning wheel while you're trying to decision a credit app on the digital fronts of our partners. So, we factored a lot of that into our build. First and foremost, hearing from merchants loud and clear that when you're thinking about an additional payment product, it needs to be easy to seamlessly integrate the product.

Terry O’Neil (11:54):

So, we invested in delivering the products via APIs, via standardized development kits, and then when you think about calculating the monthly payment on those purchases, whether they're on the product pages or in the shopping cart, or in the checkout, marketing widgets, which give the merchant the ability to ping us via an API and we'll instantaneously calculate the monthly payment for the product based on the purchase terms that we've agreed with the merchant.

Terry O’Neil (12:20):

That makes it very easy for merchants to integrate the Citi Pay products into their points of sale and into their sales journey. So, traditionally, if you think about highly bespoke private label products or co-brand products, those are deep customized integrations, those are measured in months.

Terry O’Neil (12:42):

With Citi Pay, because it's API driven, because we deliver the capabilities and the calculations via widgets, we’re weeks or days to integrate the products into the merchant's point of sale. That means we start to democratize private label, more merchants can take it, more merchants can make these products available to their consumers.

Terry O’Neil (13:03):

And then the other piece of it that I think is critically important that we heard from both consumers and merchants was make it super easy and make it intuitive for me to move through the application. So, things like conversational user interface comes in, things like our ability to prefill the application comes into the equation.

Terry O’Neil (13:22):

So, when a customer's trying to check out at any one of our merchant partners, we move them through within seconds because we're pre-filling the application for them, we're using a conversational user interface. So, it's really a text type application that happens on the consumer's device that makes it a very seamless integration for the merchant and a very intuitive and easy transaction for the consumer.

Terry O’Neil (13:47):

So, I'll close that by saying if anybody else is interested in the space and they're thinking about how they enter it, my advice would be before you start to build your products, before you start to determine how you will integrate those products into the merchant's point of sale, invest in talking to merchant partners and invest in talking to consumers to identify what's important to both and make sure you serve both of those constituents in your product strategies.

Jim Marous (14:15):

Well, it's interesting also because it's a great example that we're seeing more and more in the financial services industry of really rethinking an area, in this case, payment and lending kind of combined for the digital world, but building the back office to provide the experience that you're looking to do, you can't simply take what you've done in the physical world and make it faster, it's much deeper than that.

Jim Marous (14:43):

I mean, it's very clear from your description of the process, how many different parts weave together to actually bring a better experience to the consumer as well as the merchant. How do you see the convergence of physical and digital commerce impacting payment integration strategies right now and going forward?

Terry O’Neil (15:04):

Absolutely. I think it's incumbent upon everybody to make sure that the payment strategies that you deploy operate across physical and digital channels. What we know from consumers and merchants is that consumers will often start a shopping journey online via research, find the products that they're interested in, and then may close that sale in a physical point of sale.

Terry O’Neil (15:31):

They may be shopping digitally while they're in your store, they may be doing product comparisons while they're in the store. So, consumers have become very accustomed to seeing alternative financing strategies in the digital channels.

Terry O’Neil (15:47):

It's incumbent upon issuers to make sure that those strategies are available in physical and in digital channels, and there's no difference between the product offerings or how the consumer engages or consumes those products. So, for Citi Pay what we've done is we've invested in ensuring that the product operates the same way, whether it's in a digital channel or a physical channel.

Terry O’Neil (16:13):

We've also invested in strategies that enable a consumer to start an application or pre-qualify for the product in the digital channel, and close the transaction in the physical channel, because we know that consumers move seamlessly between digital and physical channels, that there's really a very blurred line between the two. And consumer's expectations are that if I have an opportunity or an offer in front of me in a digital channel, I expect to see those same options in the physical channel.

Terry O’Neil (16:46):

So, for Citi Pay, what we've done is in the physical channels, similar to what we do in the digital channels for our merchant partners, is the same offers apply whether you're shopping via the dotcom or shopping the physical point of sale, and the application process is all on the customer's device. So, whether you're standing in a physical store or you're on the dotcom, the application and the approval process and the disclosures all happen on the consumer's laptop or iPad or phone.

Terry O’Neil (17:20):

If you're in a store and you're making a purchase where Citi Pay is available, we'll push that application and the purchase amount to the consumer via a QR code, an SMS text or an email, and the consumer picks the application up on their device, completes it, gets the approval, picks the terms, and then gets the payment credentials so that they can execute the transaction.

Terry O’Neil (17:47):

And that's another thing that came across loud and clear in our research with consumers, was I expect to see the same financing offers regardless of how I'm shopping. So, I do believe that there will be a significant convergence of physical and digital, and consumers again, are going to drive that evolution because it's what they expect. So, we'll continue to invest in capabilities to make sure that our experience seamlessly flows between digital and physical channels for consumers and for merchants.

Jim Marous (18:22):

It's interesting, Terry, we're seeing a lot of retailers and other types of merchants out there building their own products, making it theirs as opposed to using somebody else's. How do you see that evolving over time with regard to organizations that use, let's say, Citi services or other financial institutions services versus building it from within?

Terry O’Neil (18:47):

I think what you want to consider are a couple of different things. You want to make sure that you have a partner who understands how to underwrite in the point of sale. It's very different because you're making an instantaneous decision on a consumer and you're authorizing a transaction within seconds. So, whomever you choose has to have invested in tools and capabilities to understand how to underwrite in the point of sale.

Terry O’Neil (19:11):

And we've seen issuers get into the space and pull out of the space because it's a very different environment when you're underwriting a consumer when they're standing there trying to buy something instantaneously.

Terry O’Neil (19:23):

I think the other pieces that need to be considered are, do you have the balance sheet to drive the receivables and the approvals that you need to, and do you have the experience where you have operated continuously through every economic cycle?

Terry O’Neil (19:40):

You have to have a point of view and a lens on risk tolerance and how you use your balance sheet for credit and underwriting in the point of sale. Then the final piece, and this also came out in the research that we did, both with merchants and consumers, is twofold.

Terry O’Neil (19:57):

Security is top of mind. Consumers think about the payment options they use, whether in digital or physical channels, and they're thinking about whether or not their data and the transaction are going to be secure. They have told us overwhelmingly that they want these products from trusted financial services institutions like Citi.

Terry O’Neil (20:20):

And that was a bit of surprise when I first went into this. I've been in the embedded payment and strategic partnership space for a couple of years now, and when we did that research, I first wanted to understand what consumers thought about Citi in alternative payments.

Terry O’Neil (20:35):

The response was overwhelming. First and foremost, they said that they know that we are a payments leader, so they expect the transaction to be secure and they expect their data to be secure, and they trust us. And then they finish that up by saying that they prefer these products from leading financial services institution because they know their data's going to be secure.

Terry O’Neil (20:55):

The final piece of it that I think folks need to consider is consumers also, in addition to expecting their data and the transaction to be secure, if they have an issue with the purchase, if they need to dispute that purchase they expect the issuer to stand behind them the same way that they do in a credit card transaction, in a general purpose credit card transaction or a private label transaction.

Terry O’Neil (21:21):

So, they're thinking about disputes and returns and chargebacks, and they will look to a trusted issuer because they expect that they will be backed by that issuer in the event that there's a dispute or a chargeback with the merchant. I think all of those things together is what somebody needs to consider if they're thinking about moving into the point-of-sale lending space.

Jim Marous (21:49):

It's interesting because you get into the whole situation around security, and you get into the issue around availability of the credit and the ability to get the credit decision made quickly. What did you have to go through at Citi to make it so that I don't have a situation where I go to a merchant and what I think's going to be available for me, isn't there when I want it?

Jim Marous (22:15):

And the merchant's kind of held responsible for something they have very little control over. I mean, you actually have to look at risk and compliance and security in a different way as opposed to simply risk avoidance to being a risk tolerance decision, don't you?

Terry O’Neil (22:32):

You know at Citi I have the benefit of being in a division, Citi Retail Services, that's been in point-of-sale lending for 40 plus years now. As you know, we serve some of the nation's largest retailers and our average relationship tenure is about 18 years. Our longest partner in the business is over 35 years. So, we have a tremendous amount of experience in understanding point of sale particularly around as you're calling out the underwriting pieces of it.

Terry O’Neil (23:04):

How you think about risk, how you think about underwriting, how you think about compliance and control. So, over those years, we've developed a number of tools that help us ensure that we're moving at the pace of retail so that we're not holding up the point of sale. That we're making decisions when we can and we're providing payment credentials instantaneously.

Terry O’Neil (23:36):

So, from a merchant's perspective, their concerns when they have a partner like Citi or their focus when they have a partner like Citi, should be, "Are you helping me increase my average order value? Are you helping me increase my sales completion rate? And are you helping me manage my overall cost of credit?" Those tenants have been true for us for 40 years. So, I have a very strong foundation that we were able to build our embedded payments offering on top of.

Terry O’Neil (24:08):

In addition to that, the other pieces of it, if you think again about average order value, sales completion is how quickly do we move the consumer through the application, how seamlessly do we embed in the sales journeys of the merchant? And that's where Citi over the years, has invested in capabilities like at requested sale amount, how much is the customer trying to spend right now in the point of sale? I’m going to use that in my underwriting, in my line assignment strategies.

Terry O’Neil (24:41):

If there's other data that you can share with me, I'll use that to pre-populate the app so that I could move the customer through even faster. And then there are other pieces about, we in Citi Pay, because we're moving the customer through the application on their own device, we're able to capture e-sign consent.

Terry O’Neil (25:05):

We are able to capture terms and conditions. So, that we know definitively in the point of sale that the customer received the terms that they were supposed to receive. We know that the customer selected the promotion that we're putting that transaction into, and we know that the customer enrolled in e-sign consent because within Citi Pay, it's a paperless account. So, we move them through very quickly.

Terry O’Neil (25:37):

All of that helps us not only deliver on our aspirations for the merchant to help them drive average order value and sales completion, but it also helps us ensure from a compliance standpoint that we have captured the terms and conditions, the customer is in the right promotion, and we've captured e-sign consent.

Terry O’Neil (25:57):

So, it gives us much more confidence in being able to move the customer through the application, not just quickly and seamlessly, but that we've captured all of the important components so that we're fully compliant and we're giving the customer the best experience that we can give them.

Jim Marous (26:13):

So, how do you see personalization evolving as it relates to embedded financial services?

Terry O’Neil (26:22):

It's going to be key. I would say that we're starting to see pieces of it now. We have access to a significant amount of data. If you think about the fact that we're working at the intersection of merchants and consumers, we're standing at the checkout when a customer's trying to buy something from a merchant. That provides us with a tremendous amount of data that merchants and issuers can leverage to think about customization of offer strategies, to think about promotional strategies.

Terry O’Neil (26:55):

I think what you'll start to see in the coming time is that merchants and issuers will start to use that information and leverage, obviously customer consent to deliver much more personalized offers, whether in the digital channels or in the physical channels. And there's just a tremendous amount of data that's available both on the issuing side and the merchant side that can facilitate that.

Jim Marous (27:19):

So, let's take a short break here and recognize the sponsors of this podcast.

Jim Marous (27:27):

Welcome back to Banking Transformed. Today, I'm joined by Terry O'Neil, Head of Connected Commerce for Citi Retail Services and Head of Strategic Partnerships for Citi, U.S. Personal Banking. We've been discussing the future of payments and embedded services as we enter 2025. So, Terry, how is Citi preparing for the potential economic shifts while continuing to innovate in the payment space?

Terry O’Neil (27:54):

I think, as I was saying earlier, it's critical that we put the consumer and the merchant at the center of everything that we do. So, understanding how consumers are spending, understanding how they're thinking about financing, how they're thinking about optionality and flexibility continues to be key.

Terry O’Neil (28:14):

So, the same as when we started out building Citi Pay and our family of embedded payment products, we spent a lot of time talking to consumers to understand how they were thinking about point-of-sale lending, how they were thinking about financing purchases. We continue to do that and we continue to pulse consumers. What we continue to hear is that optionality is key, flexibility is key, if they don’t see that in the point of sale, they’ll look for it elsewhere.

Terry O’Neil (28:44):

Meaning, the way that we interpret that is if they don't see a merchant showing them how much a purchase is going to cost them on a monthly basis, they might move on to the next merchant to look for that purchase. So, it's incumbent upon us to continue to provide those tools and to continue to work with our merchant partners to ensure that the consumer can see how much a purchase is going to cost them.

Terry O’Neil (29:07):

As I was saying earlier, it all comes down to, in my mind, they're thinking about their budget. Oftentimes when point of sale lending comes into play, it's either an unexpected purchase or maybe a splurge purchase and a consumer might not have the ability to fund that all upfront.

Terry O’Neil (29:26):

My dishwasher just broke, I don't want to have to go buy a brand-new dishwasher and pay for it in full. I might think about an alternative financing solution so I can spread that purchase out over six months or 12 months or whatever may be available to me.

Terry O’Neil (29:41):

So, I think they're continuing that to evaluate how they're making their purchases and what options they have available to them so that they can better understand where and how that fits into their monthly spending and I think that's a really responsible way for them to think about their purchases.

Terry O’Neil (29:57):

As I was saying earlier, with Citi Pay, based on the research that we've done, and the reason that our digital line of credit can support up to a hundred different pricing strategies is because we believe that when consumers are using alternative financing, they're often doing it for multiple purchases or multiple transactions.

Terry O’Neil (30:15):

We want them to be able to see all of those transactions in one place so that they can understand that if they've done three $50 monthly payments over six months, that they can see that it's $150 and they can view that all in one place. And we heard that from consumers that if you're thinking about it just on a transactional basis, in a pay in for strategy, you can end up with a bunch of different stacked pay in for strategies.

Terry O’Neil (30:47):

Being able to view those transactions in one place, see it on one statement, understand how long those payment strategies are going to be in place, it can help you manage your finances and budget much more effectively than you otherwise might be able to do, which is why we made the investments in building the product the way that we did.

Jim Marous (31:07):

So, with cashiers declining and digital currencies being discussed more widely, how should banks or should banks prepare for this shift in the payment ecosystem?

Terry O’Neil (31:20):

I think you're seeing us do that today. If you think about payments from a consumer to merchant standpoint, which is the space that I kind of fit squarely in and operate in, we've continued to invest in the capabilities so that we can drive tokenized transactions directly to the merchant instantaneously.

Terry O’Neil (31:39):

I think that what consumers have come to expect, as we've said, is a very fast decision in the point of sale. Make that line or approve that purchase immediately so that I know instantaneously that I have the purchasing power that I need. Invest in tools so that I can pre-qualify you or show you your purchasing power when you're thinking about a product.

Terry O’Neil (32:06):

You don't have to be all the way in the shopping cart or in the checkout to understand what your purchasing power is. You could be looking at the merchandise online or in store and check what you qualify for so that you know whether or not you qualify for that purchase. And you can also see the monthly payment plan so that you understand how that purchase fits into your budget. From a merchant standpoint, it really is about how do you drive average order value and sales completion?

Terry O’Neil (32:41):

So, in addition to the ease of integration that we talked about, in addition to moving somebody through the application really quickly, other tools that merchants should be considering are second look providers, potentially tertiary look providers, because from their lens, they should be thinking about how do I drive my approval rate as high as possible? How do I get as many consumers through the till as possible?

Terry O’Neil (33:07):

And there are different strategies that they should be employing or considering to drive that as well. And I think something that they should think about as we talked about earlier, is ensuring that those strategies are in place, whether you're in a physical channel or a digital channel.

Jim Marous (33:24):

So, finally, Terry, what payment innovations are you most excited about in the future and what challenges do you also see on the horizon?

Terry O’Neil (33:35):

I think that maybe excited might not be the right word for me, I am excited about the space in general because I think that we're seeing the consumer really in the driver's seat. As we talked a lot about the research that we've done, how we've thought about consumers and as I continue to see the space is evolving at a very rapid clip and that's because consumers are really speaking and consumer demand is at the forefront.

Terry O’Neil (34:01):

So, initially, we probably would've thought about paying for strategies or alternative financing strategies as being driven by certain demographics or certain generations. We're seeing that really span demographics and span generations.

Terry O’Neil (34:17):

I think we'll continue to see alternative payment strategies evolve, and that's going to be driven by consumer demand because as consumers have said to us, they're looking for that when they're making a purchase decision and that spans across all generations.

Terry O’Neil (34:34):

I think we will continue to see the convergence of physical and digital because we've heard from consumers loud and clear that what they see in digital channels, they need to and demand that they see in physical channels.

Terry O’Neil (34:49):

So, I think that issuers like Citi, as we said, we've already invested in it, I think we'll start to see more and more folks invest in the convergence of physical and digital so that consumers can enjoy that flexibility regardless of how they shop.

Jim Marous (35:04):

It's interesting, we went from thinking that physical would go away in some way, shape, or form, to now thinking that the winners are really going to learn how to integrate the two and make it seamless so that it's the same good experience no matter which way you care to do business.

Jim Marous (35:21):

And as you keep switching back and forth, I mean, we're in the holiday season right now and the number of times I go between digital and physical was proven yesterday where we spent four hours beginning of the day on digital and then six hours after that just replicating our work in the physical to make sure the decisions were right.

Terry O’Neil (35:41):

Yeah. Because sometimes you want to see and touch and feel and experience it firsthand. I think that's why I'm also excited about a lot of the capabilities where we can pre-qualify somebody and I can show you your purchase power, your purchasing power when you are on that four-hour digital journey so that when you go into the store to make your final decision, you already know what your payment options are. I've already told you what your purchasing power is, and you can execute that transaction with confidence in the point of sale.

Terry O’Neil (36:14):

Then the only other thing I would say that I think continues to be super exciting is the level of personalization, which we talked about, that's going to continue to be key. As more information becomes available, I think consumers will start to expect and demand that the offers will be much more specific to them and much more personalized. So, I think we'll start to see much more consumption of the data that's available so that we can drive a very personalized experience for the consumer.

[Music Playing]

Jim Marous (36:40):

And what's going to be interesting is with the greater use of AI for you to look at each individual consumer and understand how they shop, how they buy, what their needs are, and be able to deploy those on a one-to-one basis in a way that the merchant's obviously going to benefit because the consumer journey's going to be better.

Jim Marous (37:00):

But it's going to be really interesting to see how the consumer and the financial institution benefits when you understand more because people are creatures of habit. I mean, the way we go about shopping is the same way we did last year, but just in a more amped up basis. So, Terry, thank you so much for being on the show today, I really appreciate that.

Terry O’Neil (37:20):

Really appreciate the time. Thanks for having me.

Jim Marous (37:23):

Thanks for listening to Banking Transformed, the top podcast in retail banking and the winner of three international awards for podcast excellence. We appreciate your support, if you enjoy what we're doing, please take some time to show some love in the form of a review. Also, be sure to read my recent articles on The Financial Brand and the research we're doing for the Digital Banking Report.

Jim Marous (37:45):

This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage, audio engineer, Chris Fafalios and video producer, Will Pritts. I'm your host, Jim Marous. Until next time, remember, the payments ecosystem is changing faster than ever. You have to decide whether you're going to be part of that change or standing on the sidelines.