Citigroup Aims to Double Commercial Banking Revenue by Targeting Small Businesses

Citigroup is reportedly looking to increase its revenue by adding smaller clients.

Traditionally known for serving only the largest clients, the bank has expanded its focus to include small- to medium-sized businesses (SMBs) with annual revenues between $10 million and $3 billion, the Financial Times (FT) reported Wednesday (Aug. 28).

Citigroup is targeting SMBs around the world, according to the report. Over the past two years, it has added commercial lending units dedicated to SMBs in Canada, France, Germany, Ireland, Japan and Switzerland.

In other efforts to boost its focus on SMBs, the bank named a half dozen new regional leaders and bought a stake in FinTech company Numerated to use that company’s machine learning models to manage the bank’s loan data, the report said.

Citigroup’s efforts in pursuing SMBs have been helped by its reorganization, which it said will enable it to do a better job of cross-selling; by regional banks being pressured by high interest rates and commercial property losses, which have limited their ability to lend; and by the increasing importance of technology in business lending, which favors larger banks that have the resources to meet that need, per the report.

While commercial banking clients now account for only $3 billion of Citigroup’s total annual revenue of $80 billion, the bank said it can double the size of that business by adding SMBs, according to the report.

Tasnim Ghiawadwala, global head of commercial bank at Citi, told the FT that with only a small investment, the bank can gain incremental revenue by providing its mid-sized corporate clients with the same services it provides to large companies.

Small businesses have often struggled to get financing, as banks generally favor bigger commercial borrowers.

The Small Business Administration (SBA) reported in 2023 that during the previous fiscal year, $8 billion worth of potential SBA loans went unused. While the SBA is authorized to guarantee up to $34 billion in loans each year, lenders issued $26 billion of loans during the year.

One-third of Main Street business owners surveyed said loan costs remain a concern in 2024, according to the PYMNTS Intelligence report “SMB Borrowing Dynamics: Trends, Tools and Decision Drivers.”

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