Dive Brief:
- In a move to exit the banking business, State Farm later this year will begin turning over its deposit and credit card accounts to U.S. Bank in a strategic alliance the insurance company announced on Thursday.
- "State Farm has been committed to helping people for nearly 98 years," president and CEO Michael Tipsord said. "U.S. Bank is an outstanding institution that shares our commitment to strong customer relationships. When we combine State Farm’s deep customer relationships with the scale and capabilities of companies like U.S. Bank, we can help significantly more people."
- State Farm is the largest property and casualty insurance provider in the United States, and, by revenue, is listed by Fortune as the 36th largest company in the country. It has some 19,000 agents and 84 million customers.
Dive Insight:
State Farm's banking operations were launched in 1999 as State Farm Financial Services, FSB, a subsidiary of State Farm Mutual Automobile Insurance Company.
The bank operates no branch offices. Its banking services, which include checking and savings accounts, certificates of deposit and money market accounts, are available to consumers online or by phone. The bank also offers home mortgage lending.
Under the strategic alliance, in addition to assuming State Farm Bank’s deposit and credit card accounts, U.S. Bank could later provide State Farm customers with access to vehicle loans and business banking products.
"We are excited about this new alliance with State Farm because it will help us reach more customers in the moments that matter most," said Andy Cecere, chairman, president and CEO of U.S. Bank. "It is a terrific opportunity to combine U.S. Bank products, services and digital capabilities with State Farm’s coast-to-coast network of agents. This relationship will provide State Farm customers with enhanced product options while expanding U.S. Bank’s reach into new and existing markets."
State Farm’s agents will be able to offer U.S. Bank deposit products and co-branded credit cards to their insurance customers. "This alliance will benefit State Farm customers, offering them new, easy ways to manage their banking needs," said the company.
The transition of deposit and credit card accounts is scheduled to begin after closing, subject to regulatory approval, later this year and into 2021. State Farm Bank customers do not need to take any action, the company said.
