Financial services giant State Farm plans to exit banking operations, aided by a new tie-up with US Bank.
US Bank is to take on State Farm’s deposit and credit card accounts, the two companies announced last week, in a process that will start later this year and run on into 2021.
The groups are also exploring plans to share other product lines such as vehicle loans and business banking services.
New State Farm customers will be offered US Bank deposit accounts and co-branded credit cards, the companies said.
State Farm indicated that it wanted to focus on its core insurance business. It is the US’s largest provider of car and home insurance services, with an estimated 84 million policies and accounts.
In contrast, it has two million “banking and investment planning services”.
State Farm president and CEO Michael Tipsord said last week: “State Farm has been committed to helping people for nearly 98 years. US 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 US Bank, we can help significantly more people.”
“We are excited about this new alliance with State Farm because it will help us reach more customers in the moments that matter most,” added Andy Cecere, chairman, president and CEO of US Bank.
“It is a terrific opportunity to combine US 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 US Bank’s reach into new and existing markets.”
US Bank is the seventh largest banking group in the US with $487.7 billion in assets, according to data collated by the Federal Financial Institutions Examination Council. State Farm ranked 22nd in the list with $172 billion in assets as of September 30, 2019.
Separately, US Bank has taken a major step to boost its mobile and online banking services through a new agreement with technology company Fiserv.
The agreement “makes it simpler and more secure for customers to exchange data” between US Bank accounts and Fiserv-enabled apps, US Bank said in a statement.
Fiserv’s technology platform links hundreds of financial services accounts through a secure API, enabling users to control what data is shared without giving their usernames or passwords to a third party.
The agreement is the latest link-up between US Bank and fintech firms to “give customers more options and control over their data”, the company said.
Last year, it signed similar agreements with DecisionLogic, eMoney Advisor, FileThis, Finicity and MX Technologies to improve data sharing and user experience.
Gareth Gaston, executive vice president of digital platforms at US Bank, said the company wanted to ensure customers could make financial decision quicker, easier and more securely.