Magazine article American Banker

Insurer's Virtual Bank Boasts 1,000 Deposit Accounts in 3 Months

Magazine article American Banker

Insurer's Virtual Bank Boasts 1,000 Deposit Accounts in 3 Months

Article excerpt

Principal Financial Group, one of 14 insurance firms with a thrift charter, announced it has amassed 1,000 deposit accounts in a virtual bank it launched in April.

The only one of the thrift-approved insurance firms to offer banking on- line, Principal Bank joins two other virtual banks-Security First Network Bank and Atlanta Internet Bank-that have been given permission by the Office of Thrift Supervision to run under a thrift umbrella.

The bank appears to be keeping pace with other Internet-based banks in terms of the number of accounts opened in the first three months of operation. But its accomplishment is tempered by the fact that 90% of its 1,000 virtual accounts were opened by employees of the Principal Financial Group holding company.

After three months, Atlanta Internet Bank had opened 1,200 deposit accounts. Now, after two years of operation, it has about 10,000 deposit accounts.

"Our strategy is different from Atlanta Internet Bank and Security First Network Bank," said Steven J. Ollenburg, 37, president of Principal Bank. "Ours is an accommodation strategy-to add more products and services to our existing base. We're trying to design products and services, prices, and functionality to match the portfolio needs of an existing Principal customer."

Its 9.7 million customers come to the Des Moines-based holding company for life insurance, mutual funds, 401(k) plans, and health care policies. The 120-year-old firm has more than $67 billion of assets under management.

By tying its current array of services to on-line banking, Principal Financial demonstrates the ability of nonbank companies to ease into banking. For example, some customers of its 38,000 employer-sponsored 401(k) plans now have personal identification numbers so they can access those balances on-line.

The ultimate goal appears to be to offer a comprehensive view of financial relationships. …

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