Aug. 11 (Reuters) – Citigroup Inc (CN) is launching a pilot service to digitally connect U.S. small and medium-sized businesses with local and regional banks willing to lend them up to $ 10 million.
Citigroup, the third-largest U.S. bank in terms of assets, said it launched the pilot on Wednesday with 18 banks in southeastern states and Colorado.
The service was developed from a new business incubation process from Citigroup and the pilot phase will earn the bank no fees or interest, said Rohit Mathur, senior vice president of Citigroup and leader of the effort.
“We want to see how borrowers and lenders interact,” Mathur said. “We hope to have good answers and we will use the data to decide what to do next.”
Among the major banks, Citigroup has relatively few branches in the United States, with 659 concentrated in six major cities. Bank of America Corp (BAC.N), JPMorgan Chase & Co (JPM.N) and Wells Fargo & Co (WFC.N) each have over 4,000 branches across the country.
Citigroup saved money by reducing the number of branches and staff in favor of offering deposit and credit card accounts online. The strategy left her with fewer places where small businesses could speak with loan officers who know their communities.
Citigroup said the digital service it developed will make it easier for businesses to submit their financial information to multiple lenders and search for loans, as opposed to the old method of going individually to local banks.
(Corrects the second paragraph to remove Texas and Nebraska as states where pilot service is offered. Corrects the third paragraph to say the pilot is from a new Citigroup business incubation process, and not from an innovation lab.)
Reporting by David Henry in New York Editing by Matthew Lewis
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