Allstate isn't the first carrier to combine insurance and virtual banking. In February 1998, Principal Mutual Life Insurance Co. opened Principal Bank, and in November 1998, State Farm Insurance Cos. launched State Farm Bank.Although both banks still limit their marketing efforts to current policyholders, they still have achieved sizable growth in the past year. Principal Bank now has 34,300 accounts and $975 million in assets. The bank also has $900 million in deposits from checking, savings and CDs, in addition to issuing some 23,000 Visa credit cards.
The bank reported a net profit of $1.4 million last year. "We are opening accounts and getting deposits from some consumers who are not policyholders, but that isn't the focus of our strategy," says Paul Bognanno, chairman of the Des Moines, Iowa-based institution.
State Farm Bank also has grown modestly in the past 18 months. It now has $900 million in assets and $600 million in deposits. In May, it began issuing Visa credit cards and so far has distributed 20,000 cards.
"We're getting more customers who are not State Farm policyholders than I expected; about 15% aren't policyholders," says Stan Ommen, president of State Farm Bank. He adds that State Farm is enhancing its data systems to make it easier to cross-sell banking services to existing policyholders, and insurance products to banking customers.
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