Citibank’s Los Angeles presence is about to be boosted as a result of a new alliance it has formed with Farmers Group Inc. involving the marketing of car loans.
Under the alliance, 14,000 Farmers agents in 29 states will offer Citibank car loans to their auto insurance customers. That means Citibank will add 1,200 Farmers agents to its network of 18 bank branches in L.A. County.
Farmers agents will act as intermediaries for auto loans under the partnership, promoting the loans and handling all the paperwork for their customers. Farmers will also get a commission for the new business its agents generate for Citibank.
The alliance is part of a larger national trend, which has companies from different industries teaming up with one another to offer their customers more products and services outside their core businesses. The partnership is also a first of its kind for Farmers, said Brian Cohen, the insurer’s vice president of corporate development.
“We’re very comfortable with selling insurance and do it well,” Cohen said. “Our agents have a good relationship with their clients, and we’re trying to give our agents another opportunity to serve their clients (by offering them auto loans).”
Cohen said Farmers will look for similar strategic alliances in the future. For example, a future alliance could see Farmers team up with Citibank or another financial institution to offer home mortgages to holders of homeowner’s insurance although no such plans are currently in the works, Cohen said.
For Citibank, the new alliance represents a way to expand its auto loan business into markets where it formerly had little or no presence, said Citibank spokeswoman Susan Weeks.
“We have a physical presence in eight states plus the District of Columbia,” she said. “This gives us a much broader reach than we have today.”
Weeks said the new alliance is also the first of its kind for Citibank in the United States, although the bank has successfully formed partnerships with non-banking companies in other countries.
Citibank struck an alliance with a motorcycle and moped maker in India under which it provides financing for buyers of the manufacturer’s vehicles, Weeks said.
Meanwhile, local competitors of both Citibank and Farmers say they, too, have broadened product offerings for their customers.
State Farm Group, the largest underwriter of property and casualty insurance in L.A., has run its own auto financing program for over a decade, said spokesman Bill Sirola.
To expand its auto and other financing programs, State Farm filed an application two months ago to open its own bank, he added.
“We, like all insurers, are responding to customer demands that we offer more than just insurance,” Sirola said. “Our industry is changing, and everyone is looking to enhance and expand services.”
Likewise, Wells Fargo Bank spokeswoman Kathleen Shilkret said the trend of banks teaming up with non-banks to expand their business is one that is likely to continue.
In one such alliance, Wells Fargo now offers home mortgages to its customers through a partnership with PHH of Mt. Laurel, N.J. Wells Fargo has also been a leader in teaming up with local supermarkets to set up in-store branches.
“Certainly you see more cooperation between banks and non-banks,” Shilkret said.
