At Sept. 30, the Cincinnati banking company had nearly 55,000 health savings accounts with about $76 million in balances; that was 42% growth in accounts and 28% growth in deposits from a year earlier. Compared with two years ago, accounts are up 94% and account balances nearly 170%, according to Fifth Third.
The gains have come as a result of three key initiatives, according to Sue Grathwohl, a Fifth Third vice president and senior product manager.
In January 2007, the company began using technology from the vendor Canopy Financial that improved its offering's functionality. At the same time, it unveiled a call center for new customers, which is staffed by 50 service representatives trained in health savings accounts.
In September 2008, Fifth Third transferred its legacy HSA customers to the enhanced health savings product and the call center. Meanwhile, it has steadily expanded its staff of relationship managers, from one in 2007 to 10 now. "We think our growth is explained by the combination of enhancing our product and growing our sales force to broadly communicate the enhanced product," Grathwohl said.
Because health savings accounts themselves have become commodities, enhancements such as an easy-to-use interface have the ability to give custodians a real marketing edge, said Kunal Pandya, a senior analyst at
Tools that can help customers unravel often-confusing matters — how much money they must have in their core accounts before they can invest in mutual funds, for example, or what size deductions from their cards to expect at the doctor's office or pharmacy — help banks provide a better customer experience, he said.
Fifth Third was among the early adopters of health savings accounts, which were authorized by law in 2003. The company rolled out its platform in late 2004.
Despite its early start, Fifth Third has not usually been mentioned with HSA leaders like Webster Financial Corp.'s HSA Bank, OptumHealth, UMB Financial Corp. or Wells Fargo & Co.
But it has quietly nabbed big customers like Cincinnati Bell and Wright State University in Dayton, Ohio. Grathwohl describes Fifth Third's approach to the business as a patient, long-term one. Consumer-directed health care, a category that includes health savings accounts, is a growth industry, she said.
"The percentage of people who are even eligible for HSAs right now is fairly small within the general population," she said. "But it's growing very rapidly, and so long as healthcare reform doesn't knock us out of the game, we believe there is an opportunity for [HSAs] to become significant for deposits in the future."
Fifth Third's distribution model has largely revolved around its commercial bankers, according to Grathwohl. It has also built relationships with "a number of insurance brokers and third-party administrators," she said.
The bank caters to individuals through its website. And it is looking to broaden its relationships with insurers. "We have a couple of insurance partners, and that's an area we're looking to expand," Grathwohl said.
Insurers that sell high-deductible health plans typically recommend to their customers banks that offer the complementary health savings accounts.
"We want to be a preferred choice," Grathwohl said. "That's a relationship play, to build the level of trust and business with the insurer."
In segmenting the employer market, HSA providers are still going after larger, more lucrative companies, Pandya said. Though many of them already offer HSAs, they are frequently looking to add choices and upgrade existing ones, he said. Likewise, insurers are always on the lookout for partners, he said.
"Employers are always demanding new things, and there is room for replacement at a lot of the health plans," he said.
Grathwohl agreed that there is room to expand in the big-company arena. Many national companies have not adopted high-deductible health plans, and many want to offer a selection of plans, she said.
