The news: U.S. Bank is now offering banking products to State Farm’s small and medium-sized business (SMB) insurance customers. The partnership involves making deposits, lending, digital capabilities, and payment solutions available to companies through State Farm’s nearly 19,000 agents across the country.
More on this: The collaboration between the banking giant and the insurer represents a deepening of a strategic alliance that the companies unveiled in March 2020. The alliance began when U.S. Bank agreed to take over State Farm’s credit-card book and deposits, in connection with the insurer’s decision to get out of banking.
U.S. Bank’s partnership comes with a milestone for scope: It pointed out this is the first time that it’s offered a broad suite of business-banking services nationwide, as opposed to its historical 26-state footprint.
In areas where U.S. Bank lacks branches or ATMs, it’s operating as a digital-only bank with mobile and online channels available, per an FAQ section for the companies. This also includes making MoneyPass ATMs available to customers.
The bigger picture: The deal is the latest push by U.S. Bank to broaden its SMB operations. The banking giant announced in August that it would acquire SMB-focused fintech Bento, which offers corporate cards and an invoicing product. That tie-up involves pairing Bento’s lineup with U.S. Bank’s existing accounts receivable products.
The opportunity: The latest initiative, when paired with the Bento deal, represents a broader push by U.S. Bank to garner SMB customers. Both developments also position the incumbent favorably to compete against digital challengers, such as:
U.S. Bank’s partnership with State Farm gives it a base of potential customers that it can gain through the insurer’s agents cross-selling to SMB policyholders—and a national scope for its business-banking suite to boot.