Since traditional banks

are often labeled laggards in the race against nonbanks, it's unusual for a bank to teach another industry to squeeze out inefficiencies and better serve customers. Such is Cleveland-based KeyCorp's plan. Combining its customer database and data mining applications and strategic alliances with four major insurance carriers, KeyCorp Insurance Management Group aims to bring corporate managed care plans to its 370,000 small business customers, says president and CEO Roger Dunker.

It's an ambitious goal. But the $70 billion-asset bank is starting with distinct advantages. Because the insurance group is networked with KeyCorp, its agents have prospective customers in the bank's database and can use the same metrics to determine risk for insurance as for credit and loans. KeyCorp's agents don't have to spend a lot of time prospecting for customers; they can cross-sell this highly underserved market. Because independent agents rely on commission from each customer, small businesses don't carry the pay-scale to make them a viable target. "It is the weaknesses of the insurance company that become the strength of the banking industry," says Dunker.

To capitalize on this, KeyCorp developed the managed care insurance program, called "Select Partners," to offer small business customers healthcare coverage from Kaiser Permanente, United Healthcare and QualChoice, each of which competes for different segments of the market and complements each other. The bank will also market commercial property and casualty insurance through a separate alliance with USF&G. In 1998, the bank plans to allow electronic enrollment at its Web site for healthcare packages for customer employees via PC and branch kiosks, says svp Michael Hellyar. The group is also developing a card-based health care solution- first magnetic stripe and, later, smart card-to put in-plan physicians on the KeyCorp network so that co-pays are automatically transferred from patient checking accounts. Patients can check via PC or kiosk to see how much of their deductible has been paid. In-network doctors will be paid within 72 hours of the office visit, says Hellyar. "We're going to put a lot of bookkeepers out of business."


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