PNC Bank Corp. has won the endorsement of the American Automobile Association to market financial services to its motor clubs' millions of U.S. members.

PNC beat out at least 25 other institutions that responded to the auto association's request for proposals last April. In the final go-around it bested two bids - a joint one from Mellon Bank Corp and U.S. Bancorp of Oregon, and another from Banc One Corp.

AAA, an umbrella organization for 113 motor clubs with 38 million members in the United States and Canada, chose the only one of the three finalists with which it did not have a marketing relationship.

The others have issued cobranded credit cards in conjunction with regional auto clubs, but AAA was seeking a much broader set of offerings that could include deposit and investment products, mortgages and home equity loans, credit cards, and other personal loans.

PNC now has a contract to offer those financial products under the AAA label to the 34 million members of 107 affiliated clubs in the United States.

The deal has the potential to transform Pittsburgh-based PNC, a superregional bank with retail offices in six states, into a nationally prominent financial marketing organization.

Currently, AAA club members have access to cobranded credit cards through eight issuing banks. Banc One and Mellon affiliates have issued the lion's share of the 3.8 million AAA MasterCard and Visa cards.

Mellon and U.S. Bancorp joined forces last year to bid for the AAA business, hoping that their combination of credit card, marketing, and investments expertise - Mellon owns the Dreyfus mutual funds and the Boston Co. - would prevail over less diversified competition.

James J. Gudinas, AAA's managing director of financial services, said the organization was attracted by PNC's commitment to a remote banking strategy, leading to increasing reliance on nontraditional ways of reaching consumers and delivering services.

Last year, PNC invested $20 million to consolidate seven telephone- service operations into one 500-employee center, which will handle the AAA business.

Fred Grunbacher, executive vice president in charge of PNC's consumer banking, estimated that within 10 years the AAA alliance could turn the telebanking center into a $15 billion-asset bank.

"We are, in effect, the first nationwide branchless bank," Mr. Grunbacher said.

PNC will offer its AAA products on a "private label" basis, segregated from those marketed through the PNC Bank subsidiaries.

In June, PNC plans to test its AAA offerings with one of the U.S. motor clubs. It will also launch two credit cards, one of them offering travel benefits that augment the discounts members receive through the AAA.

PNC also hopes to capture AAA's business with other financial institutions, as their contracts with individual motor clubs expire.

Banc One fired off a preemptive statement on Tuesday, saying it expects to continue its "long-term, successful relationship" with the 45 AAA clubs with which it has card-issuing contracts.

When those contracts expire, Banc One may sell the accounts. In the meantime, Banc One spokesman John R. Russell said the company intends to continue to strengthen its AAA portfolio.

Mr. Gudinas said, based on Banc One's statement, that the Columbus, Ohio, institution "will try to retain as much of the AAA business as possible."

The AAA, however, will encourage its affiliates to team up with PNC. Although the umbrella group cannot force its affiliates' compliance, Mr. Gudinas said the independents will not be able to use the AAA logo or name if they remain with one of the other banks.

Their cards "would lose the national endorsement and would only be marketed as a local club program," he said.

AAA, which is also a leading sales outlet for American Express travelers checks, wants to break the bounds of its current credit card-oriented relationships.

Affinity programs based only on credit cards will give way to partnerships that offer a complete menu of financial services and products, said Larry J. Lanie, president of B.U.S.A. Financial Services Inc., a San Antonio-based consulting firm that coordinated the AAA's efforts to find a bank partner.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.