State Farm is Set to Offer Loans

Yet another big player is about to enter the already competitive consumer lending market. State Farm Insurance Companies has begun training 16,000 agents in its national network to sell home equity loans, auto loans and auto leases from agency offices. The company insures 25% of homes in the U.S. and 20% of automobiles, giving them a natural platform for discussing financing options. Nearly 1,000 agents in Illinois and 432 in Missouri have already been trained to sell the banking products. The company is in the process of training agents in Nevada, Arizona and New Mexico, and plans to extend the training to agents in Alabama, Colorado, Indiana, Mississippi, Utah and Wyoming by early 2001.

State Farm received approval to operate a savings and loan in November, 1998. The company’s Internet bank has been operating since March of this year and has gathered deposits of $130 million to date. The business plan appears to focus on bank products like auto and home equity loans that complement the insurance customer relationships but which are also easily initiated or serviced electronically through the website. The agent network provides a physical presence to deliver customer service as a backup and supplement to electronic delivery.