InBank Study Examines Insurance and Banking Convergence

InBank Study Examines Insurance and Banking Convergence

Analysis of Financial Results Points to Need for New Business Model

ALEXANDRIA, Va., Sept. 13 /PRNewswire/ -- Insurance company-owned banking operations are failing to achieve positive financial results and deficient business models are the reason, according to a study released today by InBank. InBank demonstrates there is opportunity for a new business model -- Private Label Banking -- to emerge in the marketplace.

According to the study, insurance companies have entered the banking arena by building or buying banks and an analysis of financial results illustrates neither business model has delivered profitable results. Among the study findings:

1. Insurance companies enter banking to capitalize on the financial
promise of convergence: improving distribution, increasing customer
acquisition and retention, expanding market share, enhancing market
image.

2. The vast majority of insurance company-owned banks have not met with
financial success, with cumulative losses plus invested capital ranging
from about $7 million to well over $500 million among the institutions
surveyed.

3. Insurance and banking product sets are highly complementary, however
the industries have disparate operational infrastructures and sales
cultures, inhibiting profitable organizational integration of insurance
and banking

4. Insurance companies should integrate banking products with their
existing product offering, however the majority should never own a
banking institution.

Private Label Banking is a new model providing insurance companies all the benefits a bank brings without the cost or risk. Enabling an insurance company to market banking products without building or buying a bank operation, Private Label Banking is a turnkey program drawing thousands of new customers to insurance company offices and providing the following components to activate an insurance company banking operation:

1. A full line of retail bank products branded in the name of the
insurance company.

2. Private labeled, transactional Internet banking.

3. Proven marketing programs targeting retail customers, with sales
results reporting at producer, agency, and company levels.

4. Agent training, sales support, and education.

5. Ongoing compliance management.

The study, "Banking by Insurance Companies: Is There a Successful Strategy?" is available upon request from InBank.

Methodology

As authorities on banking and insurance industry issues, InBank relied upon over 50 years of insurance and banking industry expertise when developing this study. Findings are supported by publicly available research data and call reports from the Federal Deposit Insurance Corporation ("FDIC") for insurance company-owned, and independent banking operations.

About IB Services, LLC ("InBank")

InBank has pioneered Private Label Banking for insurance companies, enabling insurance companies to capitalize upon the financial potential of banking and insurance industry convergence. Headquartered in Alexandria, Virginia, InBank has created and markets a fully supported marketing program built around banking products that generates thousands of new customers on behalf of insurance companies. The InBank Private Label Banking program allows an insurance company to offer banking products without any of the capital costs, operational risks, or regulatory responsibility associated with either building or buying a banking institution.

InBank's website is: http://www.myinbank.com/

Source: InBank

CONTACT: Bob Martins of IB Services, LLC, +1-703-229-1306, or
rmartins@myinbank.com

Web site: http://www.myinbank.com/

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Profile: insurance