Citigroup is buying a start-up that works with financial firms to offer their customers rewards, a deal that could help the lender in its quest to grow its credit cards business in the U.S. and attract more affluent spenders.

On Thursday, the bank said it would acquire Kard Financial, a company founded in 2015 and backed by investors including Tiger Global Management and Underscore Ventures. Citi didn't disclose terms of the deal but said in a press release that it wasn't material to financial results.

Kard operates a platform that allows banks and financial-tech companies to offer rewards, such as cash back on purchases for credit card holders. Citi said in a press release that Kard has handled "billions of transactions."

The start-up has "built advanced capabilities that complement our vision for the future of commerce and loyalty," Abhinav Anand, Citi's head of value cards, lending, and commerce, said in the press release.

Citi will work with Kard to "deliver more personalized experiences for customers," said Anand, a veteran banking executive with expertise in risk management who left Santander last year to join Citi.

The acquisition, a rarity for Citi since it has been under a consent order and intense scrutiny by federal regulators for six years, is a sign that the bank is moving into a more offensive, rather than defensive, posture.

Citi CEO Jane Fraser, who has run the New York-based bank since 2021, has overseen an extensive turnaround that her team calls the "transformation." Regulators in late 2020 had ordered the bank, the third-largest in the U.S., to fix the way it manages risk and "correct several longstanding deficiencies" across its systems.

Now, executives say that transformation is nearly complete. The bank has been trumpeting its plans for boosting growth and investor returns. Shares of Citi are up 47% in the past year while the S&P 500 is up 21%.

Expanding cardholders' choices and perks is part of Citi's goal to better compete with rivals, draw in frequent spenders, and boost returns. The bank reorganized its cards operation last year, forming U.S. consumer cards, led by Pam Habner, as one of Citi's five main businesses.

At an investor presentation this past May, executives said they were aiming to "win the hearts, minds and wallets of U.S. consumers."

Ben Mackinnon, Kard's founder and CEO, said in a post on LinkedIn on Thursday that the acquisition "enables us to reach our vision of making rewards simple for millions of customers across the country."

Citi has made additions to its credit- and debit-cards business in recent years. In late 2024, the bank acquired a portfolio of American Airlines-co-branded credit cards from Barclays.