US insurer Allstate will open an online bank to target its current customers with banking products.
US insurer Allstate was recently granted the full thrift charter required to set up its online bank venture. It plans to leverage Allstate Bank’s website, call center and agents to cross-sell banking products, ranging from savings products to mortgages to home equity loans, to its existing customers. Allstate feels that banking products and services will compliment its existing variable and fixed annuity business so that it can function as a complete one-stop financial service provider.
However, consumer behavior may make the switch difficult for Allstate. As insurers strive to sell banking services and products, banks are also selling insurance products. Datamonitor believes consumers will be more liable to leverage the trusted relationship with their banking institutions to purchase insurance products. They may be less likely to purchase banking products from Allstate because it is branded as an insurer, not a banker or multi-solution financial services institution.
Operationally, Allstate is in a stronger position. Savings and deposit products are not complicated products. Once Allstate agents understand banking functionalities, they could very well market and sell banking products successfully. Banks have a more difficult time selling insurance products because these are far more complicated and bankers are still familiarizing themselves with the business requirements of the insurance industry.
The business challenge for Allstate will be to connect its bank to consumers. Allstate will either have to leverage its current brand, develop a completely new brand for the bank, or actually purchase a banking corporation to leverage an existing trusted relationship with consumers. Brand management will be the key to Allstate’s success in the banking sphere.
