Jon Park, near the start of the new millennium, was facing an intriguing proposition. Executives at Westfield Insurance wanted to start a bank and they wanted Park to take the lead. The pitch was being made to the right man. Park not only had the experience — 11 years working with EY banking clients in Cleveland, and several years working in area community banks — he also had the desire.
Park was introduced through friends to the Westfield Insurance executives. For them, forming a banking arm was a new possibility after the Gramm-Leach-Bliley Act, introduced in 1999, removed the prohibition on an institution acting simultaneously as an investment bank, commercial bank and an insurance company.
The Westfield Insurance executives had concluded that there were several synergies that made the formation of a banking arm a good idea. Most of those assumptions, however, were false.
For instance, there was the idea that the insurance company could cross-sell banking services to Westfield policyholders.
“This was a common industry thought — bolt on a bank, your customers are going to want to start buying your banking products, you’re just going to make incremental profit. Almost no one has had success with that model, including Westfield,” Park says.
Another assumption was that the thousand or so independent Westfield Insurance agents would sell bank products to earn commissions. But there wasn’t enough training and the financial incentive wasn’t appealing.
The insurance company also believed it could get traction if it focused on consumer banking, since the majority of the policyholders at Westfield were consumers. Larger banks, however, were doing well in consumer banking, making that competitive advantage tough to beat.
“So you have to find niches. You’ve got to find something out there that you can out maneuver them, or out service them,” Park says. “So we started to kind of shift our mindset early on.”
The blank slate
The banking industry, at the time, was not known as one of the fastest, most efficient service businesses, Park says. Fortunately, a trend was forming that would become the institution’s cornerstone: Internet banking.
When Park was CFO at a private equity investment firm in Cincinnati, he was exploring how the Internet was transforming banking. During the six-month negotiation with Westfield Insurance, Park drew on examples from his previous experiences working with banks and his research at the investment firm, and assembled a convincing plan based on speed, customer service and remote banking.
Westfield Insurance provided the seed money — $11 million for the fledgling bank to get started — and gave Park a blank slate from which to work.
“It’s exciting, but it’s overwhelming,” Park says, describing his feelings at the time. “So you’re excited because this is a really great opportunity, but then it’s overwhelming because there’s a whole lot of pressure when you start at zero.”
