Game on: Citizens Bank to fund new Microsoft Xbox program

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

Under the deal, Citizens with $ 164.4 billion in assets will provide an installment loan to consumers who wish to purchase one of three selected Xbox game consoles and a 24-month Xbox Game Pass, a subscription service that offers a rotating list of titles. Consumers who opt for the program can also get early access to the next Xbox model, dubbed Project Scarlett, which is slated for release in late 2020.

By linking it with a recurring gaming subscription and the future launch of a next-gen gaming device, it can stimulate more interest in the product. Console hardware sales have declined over the past year as consumers wait for next-gen models to become available.

Although 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 was giving up a small margin on the product, but could make up for that with higher sales volume, especially for younger consumers who might be more comfortable with installment loans than credit cards. .

“When you look at Millennials and Gen Z, they’re heavily drawn to these subscription models where they can have the flexibility to manage their finances over time,” he said. “It’s about designing a program for how customers now think about their financial lives.”

Faced with an increasingly difficult revenue environment, banks have gotten creative in finding growth in new places. Loan at the point of sale in particular has taken off in recent years, thanks to technology that allows lenders to grant loans faster and at lower cost. Consumers are increasingly interested in these loans.

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

Fifth Third Bancorp, Regions Financial and Synovus Financial all partner with GreenSky, a fintech that provides point-of-sale loans to entrepreneurs, medical practices and specialty retail. Citizens is also the exclusive point-of-sale lender for iPhones in Apple and stores. It has a similar partnership with Vivint, a home security provider, and a pilot program with ADT, another home security company, which it announced earlier this year.

The citizens’ partnership with Xbox also involves Amazon, which is the only retailer offering the program, and LiftForward, the tech company that helped develop the product, which is called the Xbox All Access program.

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

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

Additionally, consumers who fund their Xbox purchase through this program will have a quick opportunity to upgrade to Project Scarlett at the end of next year. This console is set to take on Sony’s PlayStation 5, which is also due out next year.

Xbox hasn’t said what Scarlett will cost, but the Xbox One X, the first line among its current models, currently sells for $ 399. Most observers expect Scarlett, which comes with vastly improved hardware, to cost at least that much at launch.

Installment loans can be one way to help ease the shock of a potentially high price. Microsoft’s 2013 launch of the Xbox One was marred by a price tag of $ 500, which helped Sony’s cheaper PS4 quickly gain market share. Still, installment loans can help reduce sticker shock problems.

Sales of game subscription services also helped Microsoft and Sony offset lower hardware sales.

Coughlin of Citizens said partnering with Microsoft in this way ensures repeat business, as many customers will eventually want to switch to new consoles. He said this sets the partnership with Microsoft apart from many other point-of-sale loan relationships where the consumer only makes a one-time purchase.

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

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