U.S. banking group Citi said Tuesday it is launching a digital payment service that allows users to pay rent and school fees every month using the bank's credit cards.

The service, called PayAll, can be accessed from Citi's mobile app and every transaction would incur a fee payable to the bank.

It is currently available in Singapore where average transactions are around $3,500. The service is expected to be available in Hong Kong, the United Arab Emirates and Thailand by the end of the year. Additional spending categories are expected to be introduced over time, the bank said.

Asia has pioneered the bank's digital and mobile lending services, which are then rolled out globally, Sergio Zanatti, head of cards and unsecured lending in Asia Pacific at Citi, told CNBC.

"We saw a significant 44% growth in digital lending penetration in 2018," he said, adding the new service will give customers "more value on their spend."

To keep up with start-ups that have been disrupting the banking and financial services space, banks have increasingly embraced the use of technology in their day-to-day businesses. Many of them have moved their consumer banking services online and onto mobile apps, making it easier for users to make payments, apply for credit cards or transfer money to others with ease.