U.S. Bank is expanding its partnership with insurance giant State Farm, the latest step in the Minneapolis bank's multiyear strategy of building alliances with other companies to broaden its customer base.
State Farm customers nationwide can now apply through their insurance agents for U.S. Bank personal loans up to $50,000. The offering comes five years after the $678 billion-asset bank
It also comes as U.S. Bank, the banking arm of
State Farm has about 19,300 agents across the country. Edward Jones has a similar number of financial advisors. U.S. Bank is tapping into both of those networks to generate more business.
"This is really an important strategy for the bank," said Laura Ronlund, head of strategic alliances at U.S. Bank. "It's a way to grow nationally in very efficient ways."
Partnering with nationwide companies like State Farm and Edward Jones, which have hundreds of thousands of customers, is one way to go after those markets without immediately building more branches, Chairman and CEO Andy Cecere said at a recent industry conference.
It's "a way to … extend our reach across the country through 19,000-plus agents selling our products and services," he said, referring to the State Farm and Edward Jones partnerships. "It's a more capital-efficient, capital-light way to extend the distribution."
U.S. Bank assumed a portion of State Farm's deposits and credit card accounts, and in turn leveraged the relationship to draw in low-cost deposits and add more customers digitally. In 2021, the partnership evolved, with U.S. Bank adding business banking products and services.
To date, the bank has served more than 900,000 State Farm customers, Ronlund said.
The U.S. Bank personal loans will be available to any State Farm customer who qualifies based on credit score, credit history and other underwriting factors. They can be used to finance home improvements, debt consolidation and private-party vehicle purchases, the bank said. Consumers can apply in any State Farm office or on State Farm's website.
Kedia is scheduled to become the first woman to run the nation's seventh-largest bank by asset size. Some analysts expressed surprise over the timing of the announcement.
The funds can be available within two hours from the time of application if they're being deposited into a U.S. Bank checking or savings account, Ronlund said.
So far, the effort appears to be a success for U.S. Bank, said Scott Siefers, an analyst for Piper Sandler. It also provides the bank with a template for how to do something similar with other companies.
"This has offered U.S. Bank an opportunity to synthetically extend their physical presence and therefore the ability to sell their own products and services into a broader customer base," Siefers told American Banker. "State Farm has its army of agents, so you've got this opportunity to penetrate that customer base in addition to your own."
There could be more partnerships ahead, Arijit Roy,
"If you think about the notion of an Edward Jones' advisor, working with you and being able to open a U.S. Bank operating balance account in five minutes or less because of our digital capability, that's a pretty massive differentiator for us," Roy said. "I don't want to tease, but we've got household name-companies that have reached out to us because of that capability."
