Megan Brooks
State Farm Bank's decision to exit the banking business led to U.S. Bank assuming its existing deposit and credit card accounts. State Farm agents will market U.S. Bank deposit products and co-branded credit cards to State Farm customers. The alliance will benefit State Farm customers by offering them new and simplified ways to manage their banking needs. U.S. Bank will also be able to expand its reach into new markets and gain access to State Farm's customers.
| Characteristics | Values |
|---|---|
| Date of Alliance | 2020 |
| Nature of Alliance | U.S. Bank will assume State Farm Bank's existing deposit and credit card accounts |
| State Farm's Strategy | Exit banking operations |
| U.S. Bank's Strategy | Expand reach into new and existing markets |
| State Farm's Business | Property/casualty insurance provider |
| U.S. Bank's Business | Commercial bank |
| State Farm's Rank | Largest provider of auto and home insurance in the U.S. |
| U.S. Bank's Rank | Fifth-largest commercial bank in the U.S. |
| State Farm's Number of Agents | 19,000 |
| State Farm's Number of Policies and Accounts | 84 million |
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What You'll Learn
State Farm's exit from banking
State Farm, America's largest property and casualty insurance provider, announced in March 2020 that it would be exiting the banking business. This came with the news of a strategic alliance with U.S. Bank, the country's fifth-largest commercial bank.
As part of the deal, U.S. Bank would assume State Farm Bank's existing deposit and credit card accounts, with State Farm agents marketing U.S. Bank deposit products and co-branded credit cards to customers. The transition of deposit and credit card accounts was scheduled to begin after closing, subject to regulatory approval, later in 2020 and into 2021. State Farm assured its current banking customers that they would not need to take any action.
The alliance was part of a broader strategy by State Farm to exit banking operations. State Farm President and CEO Michael Tipsord commented on the new dynamic, stating that:
> "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 and U.S. Bank reaffirmed their strategic alliance in March 2022, with the transition of accounts almost complete by June 2023. State Farm Bank credit cards were being converted into new U.S. Bank credit cards, and the company stated that customers had been kept updated throughout the process.
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$9.95 $24.95
US Bank's expansion opportunity
US Bank has formed a strategic alliance with State Farm Bank, America's largest property and casualty insurance provider, to expand its reach into new and existing markets. This alliance will allow US Bank to assume State Farm Bank's existing deposit and credit card accounts, which totalled $11.2 billion of deposits and $1.5 billion of credit card accounts. State Farm agents will market US Bank deposit products and co-branded credit cards to State Farm customers. This will provide State Farm customers with new and easy ways to manage their banking needs, while also expanding US Bank's customer base.
This alliance is a natural partnership that combines US Bank's products, services, and digital capabilities with State Farm's extensive network of agents. US Bank will be able to reach more customers and expand its presence in new markets without having to open physical branches. This is especially true in states like Texas, Florida, and Georgia, where US Bank plans to expand its reach.
The expansion into business banking services marks a significant enhancement of the alliance, as US Bank will offer a holistic suite of products to small businesses across the country. This includes lending, deposit, payment solutions, and digital capabilities. US Bank's business banking digital capabilities bring a mix of human relationships and digital tools to State Farm customers, empowering small businesses to achieve their financial aspirations.
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Alliance benefits for customers
State Farm and U.S. Bank have announced a strategic alliance that will bring several benefits to State Farm customers.
Firstly, U.S. Bank will assume State Farm Bank's existing deposit and credit card accounts, providing customers with new and easy ways to manage their banking needs. State Farm customers will be able to access U.S. Bank's range of products and services, including checking, savings, CDs, and CD-IRAs. They will also have access to low-risk investing options, such as individual retirement accounts that invest in CDs and provide guaranteed returns with locked-in rates.
Secondly, State Farm agents will have the opportunity to introduce U.S. Bank deposit products and co-branded credit cards to State Farm customers. This means that customers will have access to simplified checking options and competitive savings accounts, helping them meet their financial goals.
Thirdly, the alliance will provide customers with access to vehicle loans and business banking products, further enhancing their product options. State Farm and U.S. Bank's combined digital capabilities will also allow customers to bank when, where, and how they prefer, providing a convenient and flexible banking experience.
Lastly, State Farm customers can continue to rely on State Farm's extensive network of agents and commitment to helping people. This alliance will enable State Farm to expand its reach and provide enhanced product options to its customers while still benefiting from the personal touch that State Farm agents provide.
Overall, the strategic alliance between State Farm and U.S. Bank is designed to benefit customers by offering them a wider range of banking options, greater convenience, and the continued support of State Farm's dedicated agents.
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State Farm Visa credit cards
The State Farm Visa credit cards offer enhanced benefits and rewards. For example, cardholders can earn up to 5% cash back on insurance premium payments for the first year and 2% cash back at gas stations, electric vehicle charging stations, drug stores, grocery stores, and dining. Other benefits include low intro APR on purchases and balance transfers for 18 billing cycles, roadside dispatch, ID Navigator powered by NortonLifeLock, and Dovly Uplift.
The alliance between State Farm and U.S. Bank provides several advantages to State Farm customers. Firstly, it offers simplified checking options and helps meet diverse financial needs. Secondly, it provides access to savings accounts with competitive returns and low-risk investing opportunities through individual retirement accounts. Additionally, U.S. Bank's digital capabilities and coast-to-coast network of State Farm agents ensure enhanced product options and improved accessibility for customers.
It is important to note that credit cards have pros and cons, and consumers should carefully review the terms and conditions before selecting a credit card. State Farm provides resources and insights to help individuals find the right credit card for their needs, including understanding the benefits and drawbacks of various cards on the market.
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Business banking products
US Bank and State Farm have formed a strategic alliance, allowing US Bank to assume State Farm Bank's existing deposit and credit card accounts. As part of this alliance, State Farm agents will market US Bank deposit products and co-branded credit cards to State Farm customers. This includes business banking products and services such as lending, deposit, payment solutions, and digital capabilities.
US Bank and State Farm share a commitment to putting customers at the centre of their operations. Through their alliance, they aim to empower small businesses by offering a mix of banking products and services. State Farm agents can now offer US Bank products and services to small business customers, including business checking, savings, money market, lending, and business payments and POS packages for every size and type of business.
US Bank business checking packages are tailored to different business types, with Silver, Gold, and Platinum options available. Business savings accounts allow customers to accrue interest on balances, while business money market accounts maximize earnings. State Farm customers can also benefit from the State Farm Business Cash Rewards Visa Signature Card, which offers up to 3% back on insurance premium payments and everyday spending categories.
Additionally, US Bank provides flexible lending options to cover business expenses, finance equipment, and purchase or refinance real estate. Their payment solutions include touch-free and contactless POS systems, and their cash management services enable customers to view account balances and activity, initiate payments, and set up multiple users for dual control.
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Frequently asked questions
No, US Bank did not buy State Farm Bank. State Farm Bank is exiting the banking business and has formed a strategic alliance with US Bank.
US Bank will assume State Farm Bank's existing deposit and credit card accounts. State Farm agents will market US Bank deposit products and co-branded credit cards to State Farm customers.
State Farm customers will have access to new and easy ways to manage their banking needs. They will be able to apply for US Bank checking, savings, CDs, and CD-IRAs online or through their local State Farm agent.
US Bank will be able to reach more customers and expand its reach into new and existing markets. This alliance will also provide US Bank with access to State Farm's coast-to-coast network of agents.
The transition of deposit and credit card accounts is scheduled to begin after closing, subject to regulatory approval, and will continue into 2021. Current State Farm Bank customers do not need to take any action.
