With another insurance giant about to open an online bank, experts remain divided on whether insurers' brand names and agents will ultimately give them an edge in selling bank products.
Allstate Corp. of Northbrook, Ill., which has been using the thrift charter it got in 1998 only to provide electronic commerce services to Allstate Insurance Co., plans to start flogging bank products online by the end of September.
Allstate announced Friday that it had been granted the full thrift charter it needed for the service. Allstate Bank plans to use its Internet site, call center, and agents to target current customers for savings and deposit products and services. It will also offer first mortgages, home equity loans and overdraft lines of credit.
State Farm Insurance Cos. of Bloomington, Ill., made a splash in November 1998 when it opened its Internet bank, and New York-based MetLife Inc. is also using its Internet bank to target its insurance customers. But both have been ramping up slowly.
Allstate Bank's current role, enabling policyholders to make premium payments through their checking accounts, has made it one of the largest originators of automated clearing house payments in the nation, the company says.
"Allstate Financial has focused on the retirement savings needs of our customers, so this bank will be an extension of that," said Kevin Slawin, chief executive officer of Allstate Bank. "CDs, savings accounts, and money market accounts are a perfect fit with the variable and fixed annuity products we've already offered. So if we offer competitive products, we should be able to make a go of it."
Mr. Slawin said the bank will go online with deposit and savings products and home mortgage loans by late September. Agents in California and New York are participating in a pilot training program and will be able to refer their customers to the call center or Web site in late September, he said.
All of Allstate's 13,000 agents will have the opportunity to take part in the voluntary training program by the end of 2002, Mr. Slavin said. Meanwhile, pilot advertising campaigns in San Diego, Sacramento, and Buffalo will launch in the coming months.
Carmen Effron, president of consulting agency C.F. Effron Co. of Westport, Conn., said Allstate's name gives it a large advantage in banking. "Allstate's agents already have relationships with their prospective customers, and people generally don't care where they get the CD or loans, as long as the rates are competitive. So Allstate should do well, as long as it is patient with its agents, as many of them have never done this before."
But Val Jordan, president of Jordan & Jordan Associates in Belchertown, Mass., called Allstate's strategy "reactionary."
"In their desire to be full service, insurers are opening banks the same way banks are buying insurance agencies," she said. But customers have no specific reason to buy banking products from an insurer, Ms. Jordan said.
"There are plenty of cross-selling opportunities and alliances that insurers can take advantage of to be a full-service operation. They don't have to open a bank."
And John M. Fenton, a principal of the Atlanta consulting firm Tillinghast-Towers Perrin, said Allstate may have to struggle to get its agents into the banking mix.
State Farm has been training its agents to offer its loan and deposit products, and by next year many of its 16,000 agents will be part of the program, the company says.
