AOL and Citigroup Join Forces

America Online Inc. (AOL) and Citigroup have reached a long-term arrangement to offer a variety of financial products and services to consumers. It is a good fit. On the one hand, AOL has some 23 million subscribers and will further extend its reach with its planned merger with Time-Warner. According to Specialty Lender, AOL's customers are "typically well-educated, technology savvy and affluent consumers who increasingly use the Internet as a convenience as much as a novelty." These consumers provide an ideal market for Citigroup to sell residential mortgages, personal loans and credit cards. Citigroup plans to offer AOL customers special services that would include benefits, such as cash back and airline mileage and purchase protection. And, of course, there is the potential of selling to AOL customers the services of other Citigroup subsidiaries: insurance services of Travelers Inc. as well as the brokerage and investment services of Smith Barney. Citigroup will be the "preferred provider" for AOL customers who wish to transfer money in private transactions. And, Citigroup will collect a small fee on the transactions.