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Greg MacSweeney, Insurance & Technology Magazine
Greg MacSweeney, Insurance & Technology Magazine
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Online bank acquires and plans to cross-sell through subsidiaries.

While many players in the online financial services marketplace have failed, NetBank, Inc., Alpharetta, Ga., has succeeded in banking and is now hoping to repeat its success in the P&C space with its purchase of selected assets of San Francisco-based, an Internet-based insurance agency.

NetInsurance will form a new yet-to-be-branded operating subsidiary of NetBank and will offer insurance products underwritten by carriers such as The Hartford, Kemper Insurance Co., Progressive and SAFECO. The new insurance subsidiary will sell the products through NetBank, Inc., subsidiaries, Market Street Mortgage Corp., RBMG, Inc., and Meritage Mortgage Corp.

"NetInsurance has always been looking for a good source of customers and our strategy was to partner with a group like NetBank," said Rob MacKethan, founder and president of, and head of NetBank's insurance subsidiary. "NetBank has a significant customer base," with about 168,000 customers and more than $2 billion in assets.

Fully aware of the fact that the e-insurance marketplace is littered with dot-coms that failed to successfully sell insurance online, MacKethan says NetBank will succeed because of the timely placement of products. "For example, we are going to offer homeowners insurance during the mortgage loan process," he said. "We can take the customer's information during the loan process and we can create a customized insurance policy exactly at the moment the loan is improved."

James Van Dyke, research director, financial services at New York-based Jupiter Media Metrix said that NetBank's strategy of targeting specific insurance products at exactly the right time should be successful. "The pitch has to be targeted and every product has a contextual niche," Van Dyke said. "NetBank is in a position to better target its products than its competitors because it is smaller."

Van Dyke says that the successful brick-and-click banks, such as Bank of America and Citibank, are direct competitors to NetBank but are not able to target specific products in a timely fashion. "The larger institutions have problems with this because of the number of products that they have," he said. "Simply because Citibank offers a product online does not mean a customer is going to buy it, a lesson many failed dot-coms have discovered."

MacKethan points out that pure online plays also do not work in the financial services space. "You find in the insurance business that it is important to have a customer base that can communicate with you easily," he said. "And while the Internet is a great place to provide service, it by no means can be the sole source of customer service and contact. We will back the Web with licensed customer service personnel," in a call center.

Adds Jupiter's Van Dyke, "Consumers are struggling to embrace online insurance." An online insurance provider "will get better results if the consumer knows there is a real person in the insurance office. NetBank's advantage is that its customers are younger and are not married to the idea of getting financial products from a traditional source," such as a physical bank or insurance agent.

"NetBank will have success with insurance, but it will not happen overnight," Van Dyke said. "In fact, I'd be surprised if it happened overnight.

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