 Carlson Learning ProductsAnybancorp
In-Store Banking
Consulting
Contact Us
Hot Links
Speaking and Seminar Leading Home
 Email fred@freddent.com 
|
 It's certain to make lot an interesting mixture, that of the banking and insurance businesses. Yet to characterize is as an oil-water blend is to think in haste; to see it as some sort of latent symbiosis is to oversimplify a multitude of issues. Somewhere, probably in the middle, there is understanding to be had and common ground to be shared. If so, both camps need to seek and find it soon, for this possibility - this inevitability, rather - raises a host of questions, challenges and, more than maybe, opportunities for banker and benevolence society man alike. Penetrating the Wall What we know as an impenetrable wall between banking and insurance is coming down. Hopefully, though, this major change will translate to a movement pattern of both lender and indemnified getting in sync with the market-place of tomorrow. Unfortunately, the triad that is the business community, bank customers and policy holders know little when it comes to the implications of this fusion. Consider the simple facts that banks are buying insurance agencies and that insurance companies like State Farm are going into the banking business. Add to such line-crossing a deadly serious maverick like Microsoft's Bill Gates vowing to take over the banking business via the Internet and we're talking about something in a state of serious flux with persuasive implications. Answers to questions - usually more questions, thought- can be found in the differences and similarities of the two businesses. Banks make loans up front and collect interest in arrears. Insurance companies collect premiums up front and pay claims in arrears. What's inverted, what's up, what's down? To the unversed observer, it might not be discernible. Like first cousins, there are enough resemblances nonetheless. Banks underwrite loans much like an insurance company (or agent) would underwrite commercial and larger personal lines accounts. Banks renew loans just like insurance companies have renewal cycles. Both are impacted by advanced accounting and predictor methodologies, as well as changing and enchanted technology. But once matters of industrial comparison and contrast are settled, then the financial services professional has to wrestle with that necessary evil of a monster - regulation. In most states, such as my own, insurance and banking are regulated by separate agencies. Sometimes these are headed by elected officials; but more often than not they are appointive. On the federal level, financial institutions are, in whole or in part, subject to oversight from the FDIC, Comptroller of the Currency, the Federal Reserve and the SEC. Insurance companies are, at best, subject only to peripheral government oversight, and typically depend on trade groups for internal policing and adherence to standards of conduct and performance. Culture Clash Add a clash of cultures, and the hot potato could look too hot to handle. How banks can maintain due diligence and still promote a proactive sales environment, for example, makes for an interesting debate, not to mention a quandary in need of resolution. Moreover, and nowhere near the least of anyone's priorities, is the customer. Manging and attracting the comprehension and responsiveness of the end-user of products and services offered by what looks soon to be the amalgam of banking and insurance, is sure to become the biggest challenge of all one that will initially be met only after some of these important industrial and regulatory questions are to some degree put to rest. These days, banks seem concerned with regionalization, looking for increased fees and lower margins in what has become a substantially more competitive environment. Insurance companies are finding themselves ever more occupied in peddling more investment-type instruments. Whether the lines are blurring or snapping in parallel form alongside each other could take for a case of mistaken identity, dependig on to whom one talks. I've seen banking at its best and worst. As a consultant in private business, I benefit from an up economy and industry climate. Having been a state banking commissioner, I've witnessed, been in the middle of and overseen the closure of 91 institutions during my native state's worst economic dowturn since the Great Depression. The aftermath of the oil boom in Louisiana brought with is a serouis crunch, and it forced my area to diversify its economy. Fortunately, something strong ultimately came out of the economic disaster; but the choas could have been avoided with just a little more foresight and perhaps some common sense. In a lot of ways, we're quite possibly looking at an analogous situation. In the end, it's a capital idea, but one of a complicated cost-benefit analysis, certainly a notion that bears careful examination, observation and re-evaluation. Taking into account the age-old directive of "follow the money," the bringing together these two separate worlds breeds the follow up maxim, "easier said that done." The time to firmly address these questions is now, as neither side will benefit from a passing of the buck when there is a chance for both to find ways to profitably co-exist. This article was published in 
This site created by  
|
