Royal Bank of Canada made its intentions for North American on-line banking clearer than ever with the cobranded marketing strategy it revealed on Tuesday with America Online Inc. and AOL Canada Inc.

Royal Bank and its U.S. subsidiaries will offer financial products and services through several AOL channels.

The marketing plan, to which Royal Bank and the subsidiaries committed $7.5 million, complements the bank's $60 million investment in AOL Canada. The investment gave the Canadian bank a 20% equity stake in the AOL unit.

But the marketing deal is in fact "much more than marketing," said James T. Rager, a vice chairman at Royal Bank.

John Cleghorn, chairman and chief executive officer of Royal Bank, said the partnership aims to get more people on-line, and more companies e- commerce enabled. "The alliance will also help Canada in its quest to be a global leader in electronic commerce initiatives," he said.

Mr. Rager said the bank will target specific parts of the AOL network, such as student chat rooms, with offers of uniquely bundled financial service packages.

In the United States, Royal Bank will use Dulles, Va.-based America Online to zero in on receptive segments of the population, hoping to lure them to its Atlanta-based Internet bank, Security First Network Bank, and to Bull & Bear Securities of New York.

Bill Doyle, director of on-line financial services for Forrester Research, called the Royal-AOL strategy "smart" and "plain sensible."

He said the winning Internet banks will be those that can attract and sell to new customers, in addition to servicing existing ones.

Portals' proficiency in "attracting and keeping an audience" make them ideal partners for customer acquisition, Mr. Doyle said.

Laura M. Starita, a senior research analyst with the Gartner Group, said banks need to "spread their names" across the Internet "so consumers can find them." By partnering with AOL, Royal Bank is "grabbing the steering wheel" to position itself at the center of the portal's relationship with consumers.

Martin Lippert, vice chairman and chief information officer for Royal Bank, said multiple channels are vital to any customer acquisition strategy. AOL was chosen because its subscribers are twice as likely as other on-line users to purchase financial services on-line, he said.

Of the 130,000 Canadian households that subscribe to AOL Canada, 40% use financial services on-line. Royal Bank claims a 25% share of those.

In turn, AOL Canada finds Royal Bank's 10 million customers attractive; 420,000 of them bank on-line.

Jack Davies, president of AOL International, said the "shared wardrobe" with Royal Bank will "turbocharge" growth of AOL Canada and accelerate Canadian e-commerce.

The joint e-commerce initiatives include linked payment capabilities, so that customers can purchase goods via AOL Canada securely. Royal Bank has 420,000 merchant relationships. Through Compuserve Canada, AOL has 50,000 small-business members.

Stephen Bartkiw, chief executive officer of AOL Canada, said it will use cobranded marketing with Royal Bank at points of sale including bank kiosks in retail outlets and automated teller machines.

Mr. Davies said AOL plans to introduce a high-speed service with a phone company this fall and with a cable infrastructure in the not so distant future. Royal's $60 million infusion will help finance those projects.

America Online has said it wants to enter countries outside the U.S. through acquisitions or equity investments. AOL already has such partners in Europe, Latin America, and Asia, though Royal Bank is its first investor in financial services. Mr. Davies said AOL is not actively seeking equity from other banks in Canada, though the deal is not exclusive.

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