The Connecticut banking company Webster Financial Corp. is seeking to fortify its leading position in the health savings account market by hiring Metavante Corp. to provide debit-card processing for its HSA Bank unit.
Nathaniel Brinn, an executive vice president at Webster and the chief executive of HSA Bank, said Friday that its agreement to offer Metavante's MBI Benefits Card would give the bank, the nation's largest custodian of health savings deposits, access to the insurers and third-party administrators that work with Metavante.
HSA Bank already had a relationship with Evolution Benefits Inc. of Avon, Conn., which offers a competing card-payment system, called Benny, Mr. Brinn said.
"At this point, we are partnered with both firms," he said. "We are partnering with them to provide service to the TPAs that they have relationships with."
Both the MBI card and Evolution's provide account holders with electronic access to a variety of pretax benefits accounts, including health savings accounts, flexible spending accounts, and health reimbursement arrangements. These "multi-purse" capabilities allow users to access funds from different accounts, depending on the eligibility of a given purchase under different programs.
Alenka Grealish, the manager of the banking group at Celent Communications LLC, said Webster has to innovate. As a midsize regional, she said, it lacks the big payment infrastructure to compete with the nation's largest banks. "This may be the only feasible route for them, and they chose a great partner," she said.
As of Oct. 1, HSA Bank was the largest custodian of health savings accounts, with 125,500 accounts and $220 million of deposits, according to statistics compiled for American Banker by Information Strategies Inc. and Inside Consumer-Directed Care.
HSA Bank's nearest competitors had half those amounts, but they include banking giants such as JPMorgan Chase & Co. and Wells Fargo & Co., as well as banks backed by insurers like UnitedHealth Group.
Celent, a research and consulting firm in Boston, said in a report published in September that HSAs will produce 15 million new accounts by 2010 and $62 billion of deposits and assets under management. It remains to be seen whether banks, insurers, or brokers will do best at bringing in those assets.
"Banks are hungry for balances," Ms. Grealish said. "If they are laggards, they are going to be left with nothing."
Mr. Brinn said that "size is not necessarily what matters here. The winners are going to be those firms that give focused effort and get to the market with the best products and services at reasonable prices."
Webster leapt to the front of the line through its March acquisition of Eastern Wisconsin Bancshares, a pioneer in the field of medical savings accounts, a precursor to the HSAs that were authorized as part of the Medicare Prescription Drug Improvement and Modernization Act in December 2003.
Metavante, the technology subsidiary of the Milwaukee banking company Marshall & Ilsley Corp., has made a series of deals recently to build its health-care finance business.
It announced last week that MBI Benefits had begun to provide real-time health plan cash account management services to Lighthouse1 LLP of Minneapolis, an online service that supports third-party benefits administrators.
Earlier in December, Metavante announced an agreement to provide a range of health payment services to Leesport Financial Corp. of Wyomissing, Pa., a $925 million banking company which provides custodial services for First HSA, the No. 6 HSA administrator in American Banker's November ranking.
In November, Metavante announced an agreement to buy AdminiSource Corp., a Carrollton, Tex., provider of payment services to insurers and health plan administrators,
Metavante bought Med-i-Bank Inc., now MBI Benefits, in July for $145 million.
