Net-Only Banks - Online Banking Report

Transcription

ONLINE BANKING REPORT
The Exclusive Monthly Report on Home Banking and Interactive Financial Products & Markets
Number 57 & 58 (Double Issue)
STRATEGIES FOR
FINANCIAL
INSTITUTIONS
____________________________
E-banking
E-service
E-billing
E-mail
E-lending
Nothing But Net
Truly virtual banking arrives…and so do the eyeballs
Question: What do you get when you integrate wire transfers with email,
then pay everyone $10 to try it?
Answer: Approximately 600,000 users in 100 days, PayPal and X.com’s
combined user bases at the end of February. An impressive total, considering
the rest of the Net-only bank industry numbers about 400,000.
inally, a bonafide ebanking hit. PayPal is adding 10,000 new users
per day and it hasn’t even advertised yet. X.com, despite a wellpublicized fraud incident (see p. 6), is the largest Internet bank based
on number of accounts, with more than 250,000 after just 90 days in
business; and it too has yet to place its first banner ad. (Note: As we went to
press, PayPal and X.com announced their merger, 3/2/00.)
F
Number of eBay Lots with PayPal Payment Option
E-marketing
E-payments
Inside
Focus On: Net-Only Banks
Screen Scraping: Naughty or Nice? .......2
Internet P2P Payments are HOT!............5
Top 10 Milestones of 1999........................8
Predictions for Year 2000 .......................10
Anatomy of a Start-Up
everbank.com raises the bar..............12
Bank of Dreams (Part 1)
Market analysis......................................17
Net-Only Banks
Scorecard..................................................18
Capsule Summaries ..............................20
Rankings....................................................30
Product Matrices...................................31
2000 Conference Calendar......................47
Safeguarding your URL .........................48
Feb. & March 2000
Feb. 28
Feb. 21
Feb. 12
Feb. 2
Jan. 28
Nov. 29
286,000
193,000
98,000
48,000
27,000
9
Source: Online Banking Report, 2/2000
Oh, but we repeat ourselves (see OBR 54). This report is about Net-only
banks, not new-fangled payment schemes. But you can’t separate the two:
Internet banking is all about electronic payments, loans, and trust.
(Hmm…sounds a lot like a credit card, doesn’t it?). Payments drive traffic.
Loans are used to monetize the traffic. And trust provides the establishment
a temporary edge over the Web-based, non-bank upstarts such as PayPal,
eBalance (see p. 4), and PayTrust.
The best Net banks score highly in only two of the three areas (see table, p.
2). The missing ingredient at most? Easy-to-use e-payments. But, as banks
and platform vendors scramble to emulate the success of PayPal and X.com,
it’s only a matter of months before you’ll be able to zip $20 across the Net
from many (most?) leading banks. See our other year 2000 predictions (p.
10) for more on what’s on the horizon.
— Jim Bruene,
[email protected]
February 28, 2000
Online Banking Report.com
Truly Virtual Banking
Screen Scraping: Naughty or Nice?
Statement aggregation, aka screen scraping, has become a big issue. Considering that a
bank you can mine up-to-the-minute customer data from your competitors, it’s no surprise
the first law suit was filed just a few months after S1’s VerticalOne unit pioneered the
practice (OBR 52, p. 19-24). But, with banks jumping on board, Fleet (Yodlee), First Tech
CU (Corillian), Hibernia (Corillian), and Virtual Bank (p. 28), it’s only a matter of time
before statement aggregation is a common Net-banking feature.
Selected Banks Rated on Three Key Net-Banking Success Factors
Company
NextCard
Wells Fargo
everbank (p. 12)
American Express
Wingspan
Intuit
Net.B@nk
PayPal
X.com
Average Bank
OnMoney
PayTrust
Payments
BC
C
B+
B
C+
C
A+
AC
D
C
Loans
B+
A
A
C
B
B
C+
CC
C
D
F
Trust*
A
A
B+
B+
BBB+
D+
CC
C+
C
Avg. Score**
9.00
9.00
8.33
7.66
7.66
7.00
6.66
6.33
6.33
5.00
3.33
3.33
Source: OBR, 2/2000; scores for illustration purposes only and cover product offerings and Web look
and feel; they are not meant to be an evaluation of the overall company. *Includes a wide array of
intangible issues that foster “trust,” including perceived security, ease of use, customer service options,
and so on. See OBR 48, p. 3. **Scoring on 12 point scale with A+ = 12, D- = 1, F = 0.
or more than two years we’ve forecasted an
upsurge in truly virtual banking services,
products that don’t require a bank charter, just
HTML and an entry point to the ACH system
(see Creating the Amazon.com of Financial Services,
OBR 38/39). After a slow start, they began arriving on
the scene in mid-1999, accounting for six of our top 10
developments of 1999 (p. 10). But there have been a
few bumps on the road. January saw two of the
pioneers bloodied, but they both recovered well.
F
1. First Union sued PayTrust for screen scraping
customer data (with user permission). It’s
probably not a coincidence that PayTrust is
competing with First Union and Spectrum in the
bill payment space.
2. X.com was vilified by John Markoff in the New
York Times for “permitting customers for almost a
month to transfer funds from any other account in
the nation’s banking system” (see p. 6). We were
surprised how little play the story got. We expected
the first confirmed fraudulent activity at a Net bank
to be blasted across every paper in the country.
Perhaps X.com benefited from being a newcomer. If
it had been Citibank, the repercussions would have
been more severe. Also, Bill Harris, media-savvy
X.com CEO, did a good job putting the situation into
perspective, believably saying it wasn’t so much a
security problem, but rather an example of where the
company’s desire to provide an easy-to-use product
was exploited by a few small-time crooks.
Note on Publication Schedule: The last two OBRs have been double issues. Two reasons prompted the altered schedule: the material warranted more pages,
and we needed to catch up on our publishing schedule. The next two months will be single issues, followed by our usual June/July double issue.
Copyright 2000: ONLINE BANKING REPORT (ISSN 1095-2829) is published monthly by Financial Insite, Inc., 5025 25th Ave. NE, Suite 104, Seattle, WA
98105, USA. Phone: +1(206) 517-5021, Fax: +1(206) 524-0351, Email: [email protected], Web: www.onlinebankingreport.com. Subscriptions: US$695 per year
worldwide, includes paper and electronic editions. Editor & Publisher: Jim Bruene, [email protected]; Business Manager: Anita Schultz; [email protected];
Contributing Editors: Margaret Quinn, [email protected]; Jim Van Dyke, [email protected]; Webmaster: Kelsey Marshall, [email protected]; Web Database:
Claire Powers; Copy Editor: Jennifer Russell; Editorial Board: Jeff Baxter, SJ Baxter & Assoc. (formerly of Citicorp); Loraine Boland, Consultant (formerly
of Wells Fargo); Bruce Bruene, The Principal Financial Group (formerly of John Deere Credit); Brian Donaldson, Authentic8 (formerly of Microsoft); Wendy
Sefcik, Digital Counterpart; Vera Wildauer, Cascade Bancorp (formerly of U.S. Bancorp). Federal copyright law prohibits duplication or reproduction in
any form, including electronic. To purchase hardcopy and/or electronic reprint rights, email [email protected].
page 2
© February 28, 2000
Number 57 & 58
Who is Liable?
First Union’s Warning on Screen Scraping
The $64 billion dollar question: Who pays if a
screen-scraped bank account is plundered?
a.) the bank
b.) the third-party pulling the data
c.) the end-user
d.) it depends
We think the only acceptable answer is, (a.) the
bank. No other response makes business sense.
Even if a third party was negligent, how are you
going to prove it? Since most users use the same
codes at multiple sites, a compromised password
could have been lifted from dozens of places.
Banks must step up and protect their customers
from monetary loss. Period. Later, the bank can go
after the third party to recoup its losses. But all that
should be transparent to users.
You should take aggressive steps to educate users
about the dangers of handing over the keys to their
accounts, but also make it clear that you are on
their side should an abuse occur. For generations,
customers have looked to banks to safeguard their
assets. Whether it’s gold bullion in the vault or bits
on your network, you have the responsibility to
thwart cybercrooks just as you do the Jesse James
variety.
First Union posts a warning telling customers not to
share access codes with third-party Web sites.
First Union has posted the following message on its
Web site, accessible via a link from the login page
(above). The non-threatening message is a good first
step in educating customers about the very real
danger of providing account access codes to
fraudulent third parties (our italics):
First Union offers Online Banking, Brokerage and Bill
Pay services to our customers. These services allow you
to access your deposit and brokerage accounts through
an authentication process which uses personal access
codes and passwords such as Customer Access Numbers
(CANs), PINs, and Codewords. We employ a number of
measures, as described in our Security Statement, to
provide these services in a secure manner. These
measures allow us to properly authenticate your identity
when you access our services and protect your
information as it traverses the Internet between your PC
and First Union.
Our security measures must rely on these access codes
remaining confidential. Please do not share these codes
or other personal identifiers with others. Certain third
party providers such as bill pay and bill presentment
sites, financial aggregator sites, brokerage sites or other
e-commerce sites may offer to provide services to you by
accessing your accounts through our site. We cannot
guarantee the security of your account when you allow
third parties to access your accounts.
OnePage, a statement aggregation service in
formation, was founded by the team that started
BillPoint, the person-to-person payments company
sold to eBay in 1999.
page 3
Furthermore, the bank’s account agreement requires
users to keep access codes confidential.
Use of these Access Codes is the agreed security
procedure to access the Services. You agree to keep these
numbers and codes confidential to prevent unauthorized
access to your accounts and to prevent unauthorized use
of the Services.
Number 57 & 58
What to Do Now
Be glad that First Union (Charlotte, NC; $253
billion ) stepped up to be the bad guy by suing
PayTrust. It may become an important precedent
in establishing business rules for ecommerce. EBay
is embroiled in a similar suit against auction
aggregators such as AuctionWatch, a partner of
X.com (p. 29). These aggregators mine eBay
listings and present them on their sites aggregated
with similar listings from 300+ auction sites. eBay
has been trying to prevent this practice with
technical and legal roadblocks, a move that
triggered counter-suits and Justice Dept. scrutiny
into whether eBay’s efforts violate anti-trust laws.
detection algorithms for these accounts to watch
for any unusual withdrawal activity; and
potentially seek confirmation from the customer
before processing any large or unusual
withdrawals.
7. Send an email to the user each time their account
is accessed.
8. Monitor your log files to see how much activity
is coming from aggregators.
9. Most importantly, offer statement aggregation
yourself, so that the activity takes place on your
turf, not a Web site in Azerbaijan.
We don’t know how the courts will rule on eBay or
First Union’s cases if they ever make it to trial. But
we advise against basing your business plans on a
swift resolution in favor of the content originators.
Instead, control your own destiny as follows (see
also OBR 52, p. 19-24):
1. HIGH PRIORITY — Beef-up security
procedures on monetary transactions: The
simplest way for banks to thwart hackers and
screen scrapers is to require periodic password
changes, an approach used by NextCard. But this
is tough on users and a burden for customer
service. A better approach is to require an
additional “transaction password” whenever users
want to move money out of an account.
Customers would agree to NEVER give their
transaction password to anyone or any Web site
(see OBR 48, p. 5-7).
2. Educate consumers on how to avoid fraudulent
virtual banking services and Web site spoofs:
We recommend a low-key approach enlisting the
support of the customer, but not threatening to
leave them high and dry if there is a problem. For
example, “please be aware that we cannot
guarantee the privacy of your info if you give your
password to a third party.”
3. Work with aggregators to ensure that customer
data is safe; forge partnerships for favorable
placement on third-party sites.
4. Lobby for oversight of statement aggregators
and e-payment companies (license
requirements, bonding, SAS 70 audits, etc.).
5. Train your e-reps on EXACTLY what to tell
customers about specific aggregator sites.
6. Flag accounts being scraped and send
periodic notices to the customer that their data
is being grabbed by xyz.com; develop fraud
page 4
While other statement aggregators pitch their services as
one-safe-place to view email, bills, travel accounts, and so
on; eBalance1 appears to be aimed squarely at banks. Its
tag line is, “the best way to manage money” and the home
page touts “automatic account balancing and
consolidation.” Finally, its privacy statement discusses
optional BILL PAYMENT and CREDIT BUREAU ordering.
Statement aggregation is inevitable. Don’t waste
energy and resources fighting it. Use it as catalyst to
improve the services at your own Web site. Your
customers want to bank with you online, but you
must offer a complete package. And we think
statement aggregation will soon be a must-have Net
banking feature.
1
eBalance is not talking openly to the press right now, but if you sign the
NDA you can get an online demo from the company. Contact: Roger
Bertman, Chairman; Myles Suer, CEO, (925) 904-2000.
Number 57 & 58
Email Payments
Internet P2P Payments Update
Addendum to issue #54 (11/29/99)
nternet person-to-person payments (P2P), aka
email payments, has been a hotbed of activity in
the three months since we first reported on the
sector. The combined growth in the user bases of
the two biggest players, PayPal and X.com1, has been
more than 6,000 accounts per day since launch. To
put that in perspective, the entire US online banking
user base across all financial institutions, has grown
about 9,000 users per day during the past two years
(OBR 52, p. 1). Another way to look at it: PayPal
gets as many accounts in one day as Net banking
pioneer SFNB got in its first three years! To recap
some of the numbers:
• 300,000+ users signed on with PayPal in the 100
days from its mid-Nov launch, a success
chronicled in a Wall Street Journal
Marketplace section cover story (2/16/00,
p. B-1; includes a quote from OBR).
• PayPal and X.com, which announced a merger on
Mar. 2, 2000, are each adding 10,000 new users
per day, and already have a combined user base
of more than 600,000.
• During Feb., X.com had more Web traffic than any
other bank according to PC Data (p. 30). Its 1.8
million unique visitors was 500,000 more than
second place Wellsfargo.com, and more than third
place Citibank.com (850,000) and fourth place
Bankamerica.com (829,000) combined.
• X.com, with more than 250,000 accounts, is now
the largest Internet-only bank measured by
number of accounts.
• Nearly 8% (307,000) of the 4 million auction lots
on eBay now feature PayPal or X.com payment
options, with growth of more than 10,000 lots per
day (see chart, p. 7).
I
Industry Developments
Since our Nov. 29 report (OBR 54), four new P2P
companies have launched: dotbank.com on Dec. 7;
X.com on Dec. 15; Mambo.com, concentrating on the
“event/fundraising payments” niche, on Jan. 19; and
PayMe.com from idealab. In addition, Wells Fargo
got into the game, purchasing a 35% stake in eBay’s
P2P unit, BillPoint. Finally, X.com partnered with
AuctionWatch for auction payments and agreed to
merge with PayPal March 2.
PayPal banners run free-of-charge on thousands of
auction pages (see chart, p. 7).
We predicted P2P payments would be popular, but
we didn’t expect it to be this fast. There are five
reasons for the hypergrowth:
• Liberal new account bonuses of $20, split 50-50
between the new account holder and the person
that made the referral. PayPal users can earn up
to $1,000 in referral fees.
• New users can sign-up and use it in just minutes.
• It completely reengineers the ecommerce sales
cycle for smaller merchants and individual sellers
lacking access to the Visa/MasterCard system,
especially at online auctions. Compared to mailing
paper checks and waiting for the check to clear,
auction participants using PayPal can slash the turntime from winning bid to shipment, from two or
three weeks to just a day or less.
• Competition: X.com and PayPal are subsidizing
the hyper-growth with millions of venture capital
dollars. PayPal landed more cash from idealab
and Goldman Sachs in February, then merged
with X.com on Mar. 2. The IPO can’t be too far
away.
• It’s free.
We are still waiting to hear how the credit card
associations will react to this interesting application of
their merchant rules. Essentially, anyone in the U.S.
with a valid (or stolen) credit card number and postal
address can immediately begin accepting credit cards
without the hassle of applying for a merchant account,
paying discount fees, and following credit card
association rules including chargebacks.
Other developments at PayPal:
• Launched a “bill presentment” option so
individuals can easily send email bills; once
registered with PayPal, recipients can pay with a
single click.
1
Disclosure: OBR Editor, Jim Bruene, had a minor consulting role in
X.com’s initial product planning in mid-1999.
page 5
www.ONLINE BANKING REPORT .com
Number 57 & 58
Email Payments
•
Added a Group Payments function that
automatically splits a tab among numerous
parties and allows it to be collected via PayPal.
•
Made it much easier to earn $10 referral fees by
creating unique URLs that users can post on a Web
site or email to others. The $10 bonuses have really
boosted word-of-mouth advertising on eBay.
Sellers don’t just casually list PayPal as a payment
option, they actively sell it. We’ve seen listings
where the seller uses more space praising PayPal
than describing their auction item.
•
Made dozens of ease-of-use improvements
including integrated email messaging, stored
email addresses of past recipients, and so on.
PayPal has been adding tabs faster than
Amazon.com. It seems as if every time I log in, the
company has added new, useful functions. Most
recently, the ability to select payee email addresses
from a drop-down list of previous recipients.
Growing Pains
From our personal experience using PayPal, there are
a few rough edges behind the scenes. During the last
two month we’ve had three problems:
1. In early January, it took two weeks for a
colleague to withdraw funds by check. The
company blamed it on lack of staffing,
understandable at a company adding 10,000
accounts per day.
2. The more puzzling incident (as quoted in the
Wall Street Journal, 2/16/00, p. B-1) occurred
when sending two $1,000 payments to the same
address within an hour of each other. Without
giving us a chance to explain, our PayPal account
was frozen, the transactions reversed, and we
received a curt email explaining that it appeared
page 6
we were attempting to take a cash advance in
violation of company rules (ironically, the reason
we sent two identical payments is that we wanted
to make sure the first one went through before
sending another).
We speculate that our account was flagged by
PayPal’s audit department after sending two
identical transactions within an hour; then a
human assigned an incorrect code to the activity.
The customer service rep would neither believe
our explanation nor let us speak to a supervisor.
Finally, after reluctantly playing the “reporter”
card, PayPal unfroze the accounts, but told us they
could not reinstate the transactions. So we
repeated the payments and they went through
without a hitch. All was fine until two weeks later
when PayPal mysteriously, and without warning,
reinstated the original transactions and we were
temporarily out $2,000.
3. Finally, as we went to press, we repeatedly had a
$10 transaction “declined by our credit card
company” even though we were able to charge a
$1,000 PayPal transaction to the same card in
between denials of the $10 transaction. We
haven’t figured that one out yet.
Newcomer X.com had similar growing pains, but
unfortunately its dirty laundry was aired in the New
York Times. During its first month in business, the
company’s procedures for authenticating new
accounts set up for user-initiated ACH credit
transactions apparently were a bit lax. (ACH credit
transactions are used to electronically transfer funds
from an account at another bank into an X.com
account.)
Here is how the problem was described in the
Jan. 28, 2000 New York Times article by celebrated
tech columnist John Markoff <www.nytimes.com/
library/ tech/00/01/biztech/articles/28secure.html>:
In what may prove to be a cautionary tale about
the headlong rush into electronic commerce,
(X.com) permitted customers for almost a month
to transfer funds (out of anyone’s) account in the
nation’s banking system.
(continued on p. 29)
Number 57 & 58
Email Payments
E-Payment Providers Take eBay by Storm
During the past six weeks, the logos of these P2P pioneers have rapidly gained
prominence on eBay, now appearing in nearly 8% of total listings.
eBay Sellers Accepting Remote Payments1
Company
Total listings (millions)
Visa3
PayPal.com
X.com4
i-Escrow.com
BidPay.com
BillPoint 5
TradeSafe.com
SendMoneyOrder.com
PayMe.com
dotbank
Internetclearing.com
Combinations
Visa less PayPal less X
X.com less PayPal
PayPal less X.com
PayPal or X.com
Type 2
credit card
email payment
email payment
escrow
money order/mail
escrow
escrow
money order/mail
email payment
email payment
escrow
credit card
email payment
email payment
email payment
11/29/99
1/28/00
2/11/00
2/21/00
2/28/00
Number1
%
Number1
%
Number1
%
Number1
%
Number1 %
3.4
100%
3.9
100%
4.1
100%
4.1
100%
4.0
100%
225,000 6.6% 268,000 6.9% 324,000 7.9% 323,000 7.9% 355,000 8.9%
9
0.0% 26,700
0.7% 96,400
2.4% 193,000 4.7% 286,000 7.2%
0
n/a
8,710
0.2% 29,970
0.7% 41,200
1.0% 48,200 1.2%
11,400
0.3% 15,700
0.4% 18,100
0.4% 18,100
0.4% 24,700 0.7%
4,320
0.1% 13,700
0.4% 16,800
0.4% 17,000
0.4% 18,400 0.5%
nm
n/a
nm
n/a
4,990
0.1%
4,400
0.1%
3,550
0.1%
103
0.0%
344
0.0%
574
0.0%
395
0.0%
300
0.0%
20
0.0%
245
0.0%
224
0.0%
183
0.0%
187
0.0%
nm
n/a
nm
n/a
nm
n/a
nm
n/a
154
0.0%
0
n/a
0
n/a
0
n/a
0
n/a
28
0.0%
8
0.0%
8
0.00%
9
0.0%
12
0.0%
7
0.0%
nm
nm
nm
nm
n/a
n/a
n/a
n/a
nm
nm
nm
nm
n/a
n/a
n/a
n/a
nm
nm
nm
nm
n/a
n/a
n/a
n/a
257,000
18,200
170,000
211,000
6.3%
0.4%
4.1%
5.1%
282,000
21,200
259,000
307,000
7.1%
0.5%
6.5%
7.7%
Source: OBR searches on eBay, 11/99 to 2/00; nm = not measured; n/a = not applicable; ACH = automated clearinghouse (electronic transfer)
1.
Number of eBay auction listings mentioning the payment alternative; many listings contain multiple payment options; many sellers have multiple listings;
search strings excluded “.com” except for x.com.
2.
In most cases, transactions are eventually charged to credit cards no matter what the type; escrow means that funds are not released to the seller until the
buyer receives the goods and authorizes payment.
3.
Includes listings where the payment method is PayPal and/or X.com, i.e., “charge to your Visa using PayPal;” in the latest period, 20% of Visa listings
included PayPal or X.com.
4.
Underrepresents X.com listings because some sellers use only the X.com/AuctionWatch graphic (no text) which does not show up in the search results.
5.
BillPoint is eBay’s in-house system currently in testing with selected high-volume merchants; on 2/29/00, Wells Fargo purchased a 35% share of BillPoint
from eBay; we did not measure BillPoint share prior to Feb.
Free advertising gold mine: There are currently 307,000
free ads running for PayPal or X.com on eBay.
page 7
PayMe.com, founded in Nov. 1999 by idealab, is the
latest entrant in the auction payment field.
Number 57 & 58
Trends
Top 10 Online Banking Milestones in 1999
Ten events in 1999 with the highest probability of being significant
in the years ahead (see OBR 44, p. 3 for 1998’s top 10).
Three
A New Breed of Net-Only Bank Debuts
a.) Bank One’s WingspanBank launches in June
with a $150 million budget and state-of-the-art
Web site, confirming that the big banks are
serious about opportunities on the Web.
Although, financial troubles at the parent have
overshadowed this particular Net initiative, we
continue to believe it was the right thing for Bank
One to do (OBR 50/51, p. 9-17).
b.) X.com launches on Nov. 30, hires ex-Intuit chief
Bill Harris on Dec. 5, becomes the first banking
entity with a P2P payments program on Dec. 15,
becomes the first publicized target of a Web-based
payment fraud reported in the New York Times on
Jan. 27, and becomes the largest Internet bank
measured by number of accounts in mid-February
(see p. 5). Just a “normal” couple of months in the
life of Silicon Valley start-up. Retail banking may
never be the same.
A sample screen from VerticalOne as presented on
AmeriTrade’s OnMoney service.
One
c.) Ameritrade launches its OnMoney financial
portal, the most prominent example of the “open
finance” business model. Not only does the portal
accept advertising, it prominently displays banner
ads from its online brokerage competitors (OBR
53, p. 19).
Financial Statement Aggregation Debuts
a.) VerticalOne proves that banks don’t necessarily
have a lock on their customer data (OBR 52, p.
19-24).
b.) S1 buys VerticalOne for $200 million giving
entrepreneurs around the world even more
incentive to create VerticalOne-like programs.
Two
Internet Person-to-Person Payments Invented
a.) First mover Confinity launches PayPal in
November (OBR 54), doing for Internet
payments, what ATMs did for cash withdrawals.
b.) Fast followers, X.com and dotBank, launched
similar services in December; Checkfree
announced it will get in the game in Q2 2000.
Five
Market Caps Sore
page 8
Four
Scan-and-Pay Bill Presentment Invented
In the span of four months beginning in March, three
bill payment providers launched very similar, and
quite innovative bill payment services: CyberBills
was first out of the gate in March, followed by
PayTrust in June, then PayMyBills.com in July. The
triumvirate proved two things:
• The Web could be used to create work-around
solutions to large infrastructure problems (getting
billers to release bills electronically).
• Even the smallest niche product, such as scanning
and paying bills, can be quickly copied and
pursued by others.
Although many high flying financial dot-coms have
come back to earth, the “April spike” will have a
lasting effect far into the future. Just one year ago, in
Number 57 & 58
the period from Mar. 2, 1999 to April 13, 1999,
Net.B@nk sprinted from 15 to 78 (prices adjusted for
subsequent 3-for-1 split). This run-up helped attract
enormous capital to the sector. Many of the wellfunded entrants will launch in 2000 boosting
innovation, pressuring margins, and in general
changing the competitive landscape online.
The Internet Roller Coaster
split-adjusted closing prices
Company
Net.B@nk
Ameritrade
E*Trade
Schwab
Oct. 1 Mar 2
1998 1999
6.00 15.4
6
5.77 15.5
4
8.78 23.8
4
18.2
36.8
8
4
Source: Yahoo, 2/00
Apr 13
1999
78.3
3
57.7
5
62.7
5
75.2
5
Oct 1
1999
21.1
3
18.0
6
23.2
2
32.5
6
Mar 2 3/2/00
2000 Index*
15.6
260
3
19.5
338
0
25.0
285
0
45.1
247
3
*3/2/00 price indexed to 10/1/98 = 100
Six
Bill Payment Evolves into a Bank-less Service
Even though Checkfree and other non-banks have
long controlled the lion’s share of electronic bill
payment processing (OBR 47, p. 9), banks have
generally hosted the front-end. But that began to
change in 1999, first with the launch of three scanand-pay providers (see number 4), then Checkfree’s
co-branded service on Yahoo! (OBR 53, p. 25-27),
Intuit’s billing service on Quicken.com, and
Transpoint’s long-awaited offering on Microsoft’s
MoneyCentral (in Feb., Transpoint and Checkfree
announced their merger).
Seven
Start-ups Target Small Businesses
It’s a cliché, “the needs of small businesses are not met
by existing banks.” We’ve been hearing that for more
than a decade, if it were true you’d think someone
would have solved it by now. But perhaps the Web is
the great enabler, allowing providers to costeffectively tailor banking services to the varying needs
of individual businesses. We believe that is the case
(see OBR 41 and 42) and 1999 marked the year when
Web-based small business got its start.
Two high profile start-up banks entered the market
eBank.com (p. 25) and OneCore.com (OBR 48, p.
12-13). OneCore uses an interesting business model,
bundling business services together to compete with
traditional banks, while maintaining the flexibility of
a non-bank.
from Softbank, Goldman Sachs, and others, has been
reengineered into a small business play.
Eight
Credit Cards Morph into Shopping Portals
Credit cards continue to dominate ecommerce
payments, with a market share approaching 90%. The
card companies, especially NextCard, are leveraging
this market share to become “shopping helpers” or
portals, with ewallets, instant credit to use online,
merchant links, shopping guarantees, and in the case
of NextCard, the ability to receive email alerts when
transactions post from certain merchants (OBR
55/56, p. 9-11).
Nine
Online Brokerage/Bank Combinations Emerge
It’s been discussed for years, but 1999 brought the
first large-scale integration of discount brokerage and
banking with the E*Trade/Telebank merger.
Recently, Merrill Lynch announced they are
building a “next generation” Internet bank as part of
their online initiatives, and Schwab announced the
purchase of U.S. Trust.
Ten
Click-and-Mortar Business
Model Takes Center Stage
Since the commercial Web came on the scene in
1995, banks have known that customers prefer a
blend of online and brick-and-mortar delivery. But
that notion was totally out of style until 1999, when
the big dot-com pioneers and their VC backers began
to promote click-and-mortar strategies. Now many of
the newest banking startups such as Virtual Bank (p.
28) and eBank (p. 25), are planning physical
“banking centers” to complement their Web brands.
More business bank start-ups are on the horizon. For
example, CompuBank, with a $38 million infusion
page 9
September/October 1999
Trends
Year 2000 Predictions
One
Three
Email Payments Widely Adopted
Online Mortgage Lending Backlash will End
Because of its phenomenal viral marketing component,
we expect person-to-person payments to be widely
adopted by Net banking pioneers in 2000. Then, as Netbanking platform vendors incorporate the feature into
their standard software offerings, everyone else will be
able to offer it in 2001-2002.
For the historical record, we’ll predict that by year-end
you’ll be able to send email payments from 75 to 100
banks and non-bank Web sites, up from three at yearend 1999. For more information on why we are so
bullish, see p. 5-6, and OBR 54, p. 5-7.
Two
The Bad Guys Gain a Little Ground
and a Lot of Attention
Online banking has been lucky so far. Except for
X.com’s write-up in The New York Times (p. 6),
banks have kept Net-based fraud under control,
and far more importantly, out of the press. That luck
won’t continue in 2000.
Two factors will bring out more thieves and vandals:
• hackers will feel more comfortable stealing
through non-bank virtual banking sites, such as
statement aggregators or P2P payment sites, than
at bank sites which have more perceived security
• the publicity surrounding online thefts will
encourage copy-cat hackers and thieves
These problems, which will be (rightly so)
sensationalized in the press, will cause politicians
and regulators to take notice, and a number of
government and industry controls will be explored.
In addition, the credit card associations may take
issue with the techniques used by P2P companies
that charge payments to credit cards.
We won’t know the extent of the regulatory moves
until 2001 or later. Ultimately, we expect the non-bank
service providers will work through these issues
successfully, but the negative buzz will give banks,
potentially working with Checkfree and other tech
vendors, a window of opportunity to launch similar
services backed by more stringent safeguards.
page 10
During the past 12 months the media stories about
online mortgage lending have come full circle. In 1996
and 1997, most media outlets dismissed the product,
saying it was too important to do online. Then in 1998
and early 1999, during ecommerce frenzy, it was a
fashionable example of doing “everything” online. By
year-end, as interest rates rose and refi volume dried up,
everyone jumped back on the its-too-important-to-trustto-the-Web bandwagon.
We predict that within six months, the tide will turn
again as people realize that the mortgage is an ideal
place to build a significant (aka sticky) Web-based
relationship with customers. Why?
1. Cost savings: The media isn’t doing the math. A
recent negative story on online lending stated that it
didn’t make sense because consumers could “only
save one-quarter percent.” But the article neglected
to point out that on a $200,000 mortgage, that’s
amounts to a savings of $500/yr, or $2,500 over five
years. That’s probably more than the average person
could save on all other goods purchased online
combined, except maybe insurance.
2. Consumer behavior: More that any other
financial product (except stock portfolios), people
track their mortgage. Most folks have a fair
understanding of their existing rate and how it
compares with current market rates. Far fewer
understand when it’s advantageous to restructure
their existing debt. Keeping users apprised of
market rates and exactly when it’s advisable to
refinance is where online banks, mortgage
companies, and personal finance sites can deliver
value and lock-in users. And even during rising
rate environments, consumers can still take
advantage of equity-secured financing to save a
bundle on their overall debt expense.
We expect Web lenders such as E-Loan,
Mortgage.com, and leading banks to do several
things in 2000 to attract more business:
• package together more sophisticated first/second
mortgage bundles that deliver cost savings in all
interest rate scenarios
Number 57 & 58
Trends
•
focus less on single credit transactions and more
on the bigger picture, using loan aggregation
techniques such as screen scraping to lower
users’ overall cost of credit.
In addition, the lending marketplaces, Lending Tree,
PrimeStreet, LoanWise, and others will beef-up their
marketing budgets to educate consumers, and the
press, on the cost advantages of online lending.
Four
Net-Only Banks Innovate Like Mad
The days of attracting a base of customers with a
high-rate offer are drawing to a close. Not because
the high rates don’t draw dollars, they always will;
but because the almost certain churn in hot money
will fail to boost market caps.
Instead, Net-only banks will find ways to draw
customers in and keep them using themes of security,
transactional convenience (P2P payments, bill
presentment, ewallets, etc.), simplicity, independent
investment advice, privacy safeguards, and so on. We
expect that these efforts will begin to win over
profitable core customers. But it will still be several
years before this trend begins to show up as
measurable market share losses for Net-laggards.
We also expect Net-only banks to ink deals with
brick-and-mortar distribution points for credibility
and advertising, both non-financial companies (e.g.,
Costco, Office Depot, Starbucks, etc.), and financial
companies. OneCore.com is an early example of a
Net-only company partnering with banks to accept
merchant deposits.
Five
Outbound Email use Expands Exponentially
Banks realize that for consumers, a visit to their
bank’s Web site has about as much appeal as
cleaning the gutters. Highly personalized email
alerts are the way into the hearts and wallets of Web
users (see OBR 47). We predict that by year-end,
U.S. banks and credit card issuers will be sending 30
million account-related email messages per month, a
15-fold increase from an estimated two million
emails (+/- 50%) sent in Dec. 1999.
Six to Ten
Dot.com Merger Mania Hits the Financial Sector
With market caps coming back to earth (p. 9), we
expect to see many pioneers scooped up by existing
powerhouses who can leverage both the brands and
intellectual capital of the Web companies. For the
record, we predict at least two of the following
combinations to be announced in 2000:
6. Net.B@nk with a leading online brokerage or
card company
7. E-Loan with a leading online bank
8. ebank.com with a top-10 commercial bank
9. everbank with a Net-only bank or card company
with more capital
10. eBalance.com with a portal, card company, or
Net banking platform vendor
Recap of 1999 Predictions
made Jan. 1999 in OBR 45, p. 4-7
Prediction
Result
Discussion
1. Ebilling takes off
mostly
blew it
the scan-and-pay newcomers
provided some excitement, but
otherwise it was pretty quiet
2. Bank-branded pay
& buy buttons
hit it
PayPal and X.com and others are
using this tool all over the Web
3. Cobranded banking mostly
centers
hit it
most portals have banking areas,
but billing has been slower
4. Web-based bill pay mostly
centers appear
blew it
see above
5. Regional Web
banking centers
appear
mostly
blew it
only BankZip (p. 23) has been
showing this business model
6. Bank-run loan
marketplaces
appear
mostly
blew it
only Royal Bank’s PrimeStreet
hit this definition
7. Banking statement
consolidators
appear
hit it
VerticalOne, Yodlee, OnePage,
PayTrust, eBalance are all
working on this business model
8. Pure Net bank spin- kind of
offs
hit it
we predicted 25 to 35 start-ups,
the actual number was at least 17
(that we know about)
9. An explosion in
advertising
hit it
NextCard (all year) and Wingspan
(summer) were two of the Web’s
largest advertisers
10. A credit card
company merges
with a portal
mostly
blew it
the closest thing was Providian’s
purchase of GetSmart, a loan
portal
Source: OBR 2/00, 1/99; predictions appeared in OBR 45, p. 6-7
page 11
Number 57 & 58
Bankers Raising the Bar
everbank.com
The start-up bank asks,
“Is this the single best Web
banking account in the
nation?” We say, “It
depends.”
It depends on:
(a) Whether you keep at
least $1,500 on deposit
to earn the 6%.
(b) What the rate resets to
after the first 6 months.
(c) How the customer is
served.
THE COMPANY: The St. Louis,
MO-based bank officially
launched on Jan. 11, 2000,
after a two-month soft-launch
period that brought in $8
million in deposits
(see OBR 54, p. 20). The bank
was developed by start-up Customer One Financial
Network <www.c1fn.com>. Wilmington Savings
Fund Society (WSFS) (Wilmington, DE; $1.7
billion) became a minority investor in Aug. 1999
with a $5.5 million investment for a 25% stake.
WSFS
is scheduled to invest another $5.5 million in a
few months. The arrangement is referred to as “joint
initiative” on the company’s Web site. Everbank
also received $7 million in funding from private
investors.
The bank employs 25 (mid-Jan), with eight in
customer service. Initial marketing commences in
mid-Feb.
The idea for the bank began about four years ago, but
actual development commenced in early 1998. EVP
Marketing David Galland has experience in direct
marketing of investments and expects to see the bulk
of everbank’s customer base driven in through
conventional direct mail techniques. Currently, a
6.01% promotional deposit rate features prominently
in the bank’s sales pitch.
page 12
THE MANAGEMENT TEAM:
Three of five founding execs came from Signet
Bank, an online banking pioneer (OBR 22, p. 17)
prior to being purchased by First Union.
Position
Name
Background
CEO
Frank
Trotter
Lead Mark Twain’s pioneering foray into
digital cash and was SVP Capital Markets at
Mercantile Bank after purchasing Mark
Twain
EVP, Dir.
Product
Groups
Robert
Foregger
Marketing & New Product Dev. Mgr. at
Signet Bank, was Sr. Marketing Mgr. at
Blanchard Funds
EVP, Dir.
Home
Services
Kyle
Meyer
Co-founder of American Finance &
Investment, online mortgage lending
pioneer (OBR 23, p. 13), acquired by First
Mortgage Network now Mortgage.com
EVP
Marketing
David
Galland
Founded his own marketing consultancy
after being VP at Signet Bank and Dir of
Marketing at Blanchard Funds where he
managed a direct mail program that
attracted 100,000 customers and $5 bil. in
customer assets
EVP, Dir
Operations
Vincent
Amato
Was VP of Mgmt Info Systems at Signet,
worked at Blanchard and Chemical
Number 57 & 58
THE PRODUCT: Banking products run on S1’s
Internet banking platform which supports
categorizing expenses online and downloading into
Quicken or Money. The company has also added the
following features:
• 100% Web Safe Guarantee - similar to NextCard,
guaranteeing account against fraud
• 100% satisfaction guarantee
• 7 x 24 customer care center
• free/no-fee services: unlimited bill pay,
nationwide ATMs, check writing, Visa Check
Card, inbound wire transfers, overdraft protection
advances
• ATM surcharge rebates, up to $4 per month
• airline miles credit card with a low, prime +1.9%
“go to” rate (not a teaser)
• yield pledge - top 5% of all interest checking
accounts and money market accounts as listed in
Bank Rate Monitor
• financial organization reports created from
categorized transactions
• investment center (in house) with $19.95 trades
and access to 2,000 mutual funds
• opening promo: 6.01% checking (no maximum
balance) for first 10,000 accounts opened before
Mar 31, 2000 (1% higher than “normal” APY of
5.01%); minimum average balance of $1,500
required to earn interest and avoid the $4.95/mo
maintenance fee (min. opening deposit = $100)
• 15-minute mortgage application with 10-second
approval and low-rate guarantee
• insurance center co-branded with InsWeb
• home buying research area with Realtor referrals,
home listings, calculators, change-of-address
service, and so on
•
•
•
•
Coming Soon
Web site for real estate agents to initiate mortgage
applications; have signed up 500 (see screenshot
upper-right)
home equity lending in Q2
Evertrade advisors in Q1; expected to be the first Net
bank offering investment advice for the typical
infrequent trader (see OBR 49)
full-service investment center with private-branded
index funds
Source: interview with company execs, 1/15/00
NewMLS.com was designed by everbank.com parent,
CustomerOne Financial, as a Web-based center for real
estate agents. It features financing through everbank.
MARKETING STRATEGY: The bank’s marketing
messages in its initial press releases and direct mail
piece include:
everbank.com Marketing Messages
Where
Web site
Press release
headlines
Direct mail
headline
Direct mail first
sentence
What*
everbank.com, Go direct. Get more.
Guaranteed.
• ...the only bank you’ll ever love,
ending fees and frustration
• ...offers customers a 100%
satisfaction guarantee and
exceptional live 24/7 service
• Shaping a new kind of consumercentric bank for the Internet age
• Launch mission for everbank.com:
create a bank that consumers will
love
• New Internet bank entry takes on
stodgy banking Goliaths by
offering industry’s first 100%
satisfaction guarantee.
Earn one of the nation’s highest riskfree yields on your money...while
dramatically reducing the hassle of
managing personal finances and
slashing the time you spend paying
bills!
Managing your finances just got
easier...and far more rewarding.
Source: company press kit, 1/00
*quoted verbatim from company material
page 13
Number 57 & 58
During testing in late 1999, the company conducted a
100,000-piece direct-mail drop. The test results
yielded a mix of 80% of new accounts generated
from marketing and 20% from referrals. Thirty
percent of customers bought its credit card.
BUSINESS MODEL: The company expects to turn a
profit in much the same way as a traditional bank,
with a small interest margin on deposits, more on
loans, and fees along the way. Everbank.com is
counting on a cost structure lower than brick-andmortar banks that can be reflected in lower prices
without sacrificing profits.
This meter runs across the application,
growing as the application is completed.
APPLICATION P ROCESS: The application was
straightforward enough, taking 7.5 minutes to
complete, including downloading and printing the 33page disclosure. It worked without a hitch and
included a clever application status meter (see above)
running across the top of each page.
The bank did a good job cross selling overdraft
protection and a Visa Rewards card during the
application. Our only complaint concerned the
disclosure statement. The bank used the kitchen sink
approach, throwing everything into one long
document that was 155k in size and 33 printed pages.
That would have been OK if it was downloaded just
once. But we ended up downloading the same
monster file four times, because it wasn’t clear that
the single disclosure covered all products.
The account funding process was strictly paper based.
You had to print and mail the application along with
a check for the opening deposit, $100 minimum,
$1,500 to avoid the $4.95/mo fee. The bank should
come up with an ACH and/or credit card option for
initial account funding.
$5,000 stock purchase immediately after completing
the application. At PayPal, you can send someone up
to $200 right away.
At least let us log into our account and verify
application status and user profile. Even better, provide
something interactive such as stock prices, weather
forecasts, and so on. Don’t leave us hanging.
AFTER HITTING SUBMIT: Finally, our usual rant on
post-application customer support. Everbank did better
than Wingspan Bank (OBR 50/51, p. 8-16), it at least
confirmed out application with an immediate
autoresponse email (see right). The email included an
excellent benefit for returning the application in a timely
fashion. If it was returned by Mar. 31, 2000 (eight weeks
after we applied) we would lock in the 6.01% teaser rate
for at least six months.
But then we heard nothing from the company for ten
days when a snail-mail package arrived with our
account information. Then a few days later we
received a letter with our initial password and a
concise (8-panel, 2-color), well-done brochure
describing how to use online banking and bill pay.
Here’s the deal. We spend a half-hour checking the
bank out, putting our privacy at risk by handing over
all our personal information, printing out a 33-page
disclosure, finding our checkbook, an envelope and a
stamp; then sending a couple grand in the mail. We
expect more feedback, for example:
1. Within minutes of receiving a deposit, send a
confirmation thank-you by email.
2. Within 48 hours, send new account information
via snail mail with an email telling us to be on the
lookout for the package.
3. A few days later, send an email asking whether the
package was received and offering to answer
questions.
4. Repeat #3 periodically until we log in.
CONTACT:
Robert Foregger is SVP Product Development
(802) 253-4681, ext. 12 [email protected]
Another serious flaw is the welcome process. After
spending nearly 10 minutes filling out the
application, we did receive a nice thank-you screen
message. But, when we tried to log in to our justcreated account to see if everything was OK, we got
an error message. We can understand why the bank
doesn’t give us full access to all banking functions
prior to receiving the paperwork, but why not give us
something to do? At DLJdirect you can make a
page 14
Number 57 & 58
based on a very strong showing in the Overall Cost and
Relationship Services categories (refer to Gomez.com
for category definitions). It leverages this endorsement
with a $50 bonus offer for new customers signing up
through the Gomez site.
everbank Application Autoresponse
Subject:
Date:
From:
To:
Thank you for applying at everbank.com!
Tue, 1 Feb 2000 20:20:51 -0500
everbank <[email protected]>
[email protected]
everbank.com’s Gomez Scores
Dear Future everbanker,
Thank you for completing the online application for the
EverMoney e/Checking Account. Simply sign and return it along
with your opening deposit and you are on your way to better
banking... everbanking that is!
Be sure to open your account prior to March 31, 2000 because
that way you’ll qualify for the special 6.01% APY (annual
percentage yield) for a minimum of 6 months following your
account opening!
After the initial 6 month period, your APY will vary, but you
have everbank’s “best rates guaranteed” yield pledge that your
EverMoney e/Checking Account yield will always remain in the
top 5% of bank money market accounts in the nation.* That way
you never have to wonder if you are earning one of the nation’s
best risk-free yields.
So, please, to be sure of making the March 31, 2000 date, send
your application and opening deposit today. You are going to
love everbank.com!
It’s guaranteed!
++++++++++++++++++++++++++++++++
Vincent F. Amato
EVP, Director of Operations
everbank.com
11 Oval Drive, Suite 107
Islandia, NY 11722-1479
Tel: 1-888-882-3837
Fax: 1-888-882-6977
[email protected]
Category
Overall Cost
Relationship Services
Ease Of Use
Customer Confidence
On-Site Resources
Overall
Score
9.52
6.17
6.18
5.49
4.03
6.32
Rank
4
7
26
35
40
10
Source: Gomez.com, 2/00
The new bank is one of the new breed of Net-based
startups: part bank, part broker, part investment
advisor, part lender, part mortgage broker, and part
credit card issuer. From a product standpoint, it’s
much like WingspanBank. But even Wingspan, with
its very deep Bank One pockets, offers fewer
products than what everbank is launching with.
The danger for the bank is overextending itself. With
only 25 employees, running an in-house bank,
brokerage, and mortgage lender will require a
balancing act like no other Net-bank startup has
attempted to date. We question the merits of bringing
the brokerage operation in-house. We think the bank
would have been better off out-sourcing that function
and reassigning resources to core banking functions.
But, if the bank can pull it off, it could be a key to
building franchise value.
Although we like the overall look and feel of everbank,
we think they could tone done the hyperbole a notch.
For example:
All Contents Herein Are Privileged & Confidential
Visit the future of banking at http://www.everbank.com
++++++++++++++++++++++++++++++++
P.S. If you have ANY questions, or need ANY help, please don’t
hesitate to give us a call at 1-888-882-EVER (3837), then press
“4” at the prompt to speak to a live Customer Care Specialist. Or,
e-mail us at [email protected]. We look forward to being of
help!
* Based on the Bank Rate Monitor Index of America’s 100
Leading Banks. Fees may reduce earnings. To earn interest and
avoid a $4.95 monthly fee simply maintain an average daily
balance of $1,500 in your EverMoney e/Checking Account. If
you do, then full interest is paid and there are absolutely no
monthly maintenance fees!
(1) Direct mail: The DM piece looks like one of the
many investment come-ons that arrive in the mail
almost daily. They must work, or companies
wouldn’t send them. But we think the bank
would be better off with a more upscale lookand-feel to its marketing.
(2) Press releases: We like the overall positioning,
separating themselves from traditional banks. But
some of the material sounds silly at best,
everbank.com is a division of Wilmington Savings Fund Society,
FSB. Member FDIC, Equal Housing Lender 141A
Source: company, 2/1/00
Analysis
We’re not the only one who likes everbank.com. The
bank debuted at number 10 on Gomez’s bank scorecard
page 15
Number 57 & 58
or even mean-spirited. For instance in the glossary they
define pin-stripers as “AKA ‘fat cat bankers’ or ‘men
with soulless eyes.’ They can usually be found in
marble palaces. Asleep. Or calculating new fees to
separate you from your money.”
install. It raises the question, “If everbank’s rates are
so hot, why don’t they make it easy for me to confirm
that myself.”
Summary: Aside from a few minor flaws in the
application process, we find little to fault. The
product line is superb, prices are rational, the
marketing strategy is solid, the Web site is excellent,
and the bank has assembled a seasoned and
enthusiastic management team. So we’re giving
everbank.com our first “OBR Best of the Web 2000”
designation for the year. It’s not perfect, but
considering they’ve only been open a couple months,
it’s an impressive start.
Rate comparison, screen 1: Shows annual
return of an everbank CD compared to selected
competitors and to the overall national average.
In this case, a $20,000 5-year CD.
everbank’s mortgage capabilities, using M&I’s
MortgageBot, set it apart from most online banks.
Rate comparison, screen 2: Shows the increased
return over time.
One of the best features of everbank’s sales
presentation is its rate comparisons which allow users
to compare rates and see how much more they earn
with everbank over time (see screenshots above).
But, they could be even better by allowing users to
compare actual up-to-the-minute rates around the
Net. There is risk to this strategy, but Net users know
that this kind of hyperlinking is relatively easy to
page 16
everbank has put extra care into its graphical
elements. For example, these eye-catching and
concise virtual sticky notes are an effective way to
“post” the bank’s important guarantees.
Number 57 & 58
Bank of Dreams
Part 1: Market Analysis – Survey of Current Product Offerings
bankofdreams.com1
Over the next 12 to 18 months we will build the “ideal” Internet bank within the pages of Online
Banking Report and on our Web site. The first step is the market analysis that begins this month
with a look at the current crop of Net-only banks. Next month, we’ll drill down into the numbers,
update our semi-annual forecast and review key industry metrics.
Net-Only* Banks Becoming a Competitive Factor
A year ago we predicted there would be 25 to 35 Net-only banks, or bank divisions, launched in
1999. We underestimated regulatory hold-ups and only 172 made it out of the starting gates in
1999, bringing the total Net-only banking universe to 24. Another dozen or so have announced
intentions to launch in the first half of 2000, pending regulatory approval.
*Definition: Net-Only Bank
We previously defined Net-only banks as those that operated without any branches and were not divisions of
traditional brick-and-mortar banks. By that strict definition, only four true Net-only banks exist: Net.B@nk,
CompuBank, First Internet Bank of Indiana, and NextCard/Bank. If you include non-banks offering banking services
through partnerships, OneCore and X.com would make the cut. But going forward, we are expanding the definition to
include any entity that positions itself primarily as an Internet bank, regardless of its ownership; and even if the
company operates one or more brick-and-mortar branches. Using this definition, there are 24 operating Net-only banks
in the United States (see list on the next page), and dozens more around the world.
f you’ve wondered why we devote so much ink to
the Net-only banks, it’s not because we
necessarily think these companies will be the
winners. It’s way too early to make that call. The
brick-and-mortar companies have enormous leads in
almost every meaningful category, brand awareness,
trust, profits, market share, etc. Net banks will have to
work hard, make big bets, and have a little luck, in
order to make it in a market already saturated with
20,000 financial institutions. Because these
companies will be working so hard, and with a higher
tolerance for risk, we expect many of the biggest
innovations and flops of the decade to come from
Net-only financial companies. For example, look at
the past few weeks alone:
I
•
PayPal and X.com hit 300,000 users each during
their first 100 days after launch
•
X.com became the most-visited U.S. bank Web
site (p. 5)
•
PayTrust was sued by First Union for “violating
customer trust”
•
everbank.com launched with 15-minute loan
approval and lands in the Gomez top 10 (p. 33)
Virtual Bank bagged $38 million in venture
capital and signs on to aggregate statement using
VerticalOne’s platform (see p. 28)
•
page 17
•
•
E*Trade received enormous, mostly positive
press, with its irreverent Super Bowl ads featuring
monkeys and a man with money “coming out his
wazoo.”
CompuBank, which attracted only a few million
in deposits during its first year in business, landed
$38 million in venture capital from Goldman
Sachs, Softbank, and others to relaunch as a bank
for small business
We will continue to pay close attention to the Netonly startups, where we expect to find numerous
examples of what to do and what NOT to do. We also
realize there are hundreds of banks and credit unions
toiling away behind the scenes doing equally
important work wiring their existing customers. If
you can share your successes or failures with others,
please drop us a line, [email protected].
1
For those unfamiliar with U.S. movies, Bank of Dreams is a takeoff on the popular 1989 flick, “Field of Dreams.”
2
We are only aware of 17 start-ups (listed on the next page). There
were probably a half-dozen or more that launched quietly during
the year, bringing the total closer to 25.
Number 57 & 58
Bank of Dreams
U.S. Net-only1 Bank Scorecard
Name
1995 (n = 1)
Security First
Network Bank
(SFNB)
1996 (n = 2)
nBank
Net.B@nk
1997 (n = 1)
NextCard/
NextBank
1998 (n = 3)
Principal Bank
Launch
Month
Notes
Num. of
Accounts2
Oct.
Royal Bank
of Canada
launched by Cardinal Bancshares; spun off in
IPO in summer 1996; sold to Royal Bank in
1998
27,622
deposit
9/30/99
March
The First
National
Bank of
Commerce
public
(NTBK), IPO
7/97
has primarily operated as the Web front-end
for parent FNBC; have not marketed
themselves as a Net-only bank; bill pay
added in Nov. 1997
launched as Atlanta Internet Bank by
Carolina First in Oct. 1996, spun off in an
IPO in July 1997
10.7%
penetration of
FNBC
customers
Dec.
(credit
card
only)
public
(NXCD), IPO
5/99
Feb.
The Principal
Financial
Group
E*Trade as of
Jan. 2000
Oct.
Telebank
March
(Internet
access)
CompuBank
Oct.
1999 Launches (n = 17)
USAccessBank
Feb.
First Internet
Bank of Indiana
Feb.
OneCore.com
March
USA Bancshares
Feb
page 18
Ownership
private
Porter
Bancorp
($500
million)
owned by
private
investors and
Newcourt
Financial
private
public
(USAB)
Assets3 Deposits3
$173 M
192
70,000 total
$1,300 M
1/31/00;
12/31/99
45,454 deposit
9/30/99
$654 M
12/31/99
63
privately held until IPO in May 1999;
purchased Textron Bank 9/99 to create Netonly bank, NextBank.com; current focus is
“on the transaction” and may be less
interested in traditional deposit-taking
operations
250,000
accounts
2/22/00
$500 M
2/22/00
$314 M
9/30/99
subsidiary of insurance giant, attempting to
leverage massive customer base and
distribution system
originally Metropolitan Bank for Savings,
reengineered into telephone-based direct
bank in 1994, added Internet access in 1998
and gradually changed focus to Net-only;
announced merger with E*Trade in May
1999, completed 1/00
being completely rebooted as a B2B play
with Feb. first round of $38 million from toptier investors including Softbank Finance,
GE Financial Assurance, Goldman Sachs,
and Marsh & McLennan Capital
2,200
customers
(6/99)
$113 M
$88 M
130,000 total
12/31/99
$5,000 M
12/31/99
$2,600 M
12/31/99
6,000
2/10/00
$7.4 M
$4.4 M
23
partnering with DoughNet and OneCore
5,000 total (e)
<www.firstib.com>, CEO/founder, Dave
Becker, also runs Net-banking platform
vendor VIFI;
5,600 total
2/00
$97 M
$85 M
15
11,000 total
2/00
$320 M
$257 M
59
non-bank targets small businesses using
money market funds (not FDIC insured) to
hold liquid deposits, features $100 million
“deposit” insurance
relaunched as a Net-only bank in 1999; just
launched B2B entrant, b2banc.com;
launching affinity banks, first is
bowiebanc.com
$267 M
FTE
24
Number 57 & 58
Bank of Dreams
Name
Launch
Month
Ownership
Notes
Num. of
Accounts2
Assets3 Deposits3
Millennium
Bank
p. 25-26
April
private
<www.thenetbanker.com>, launched by
Patriot Bank exec
Bank Direct
p. 22
May
Texas Capital
launched jointly with bricks-and-mortar
bank; Internet subsidiary planning a spin-off
in 2000
7,000 total
2/00 up from
3,000 10/99
WingspanBank
June
Bank One
operated by First USA, Bank One’s credit
card division
107,000 total
12/31/99
eBank
p. 25
June
public
(EBDC)
Formerly Commerce Bank, Atlanta launched
in August 1998; renamed eBank in June
1999; has one branch and plans to open 3
more in 2000
1,078 deposit. $55 M
9/30/99
citi f/i
Aug.
(beta)
CitiGroup
soft launch in summer 1999 (perhaps due to
its slot in the Microsoft Money 2000
program released in Sept. 1999); full
marketing roll-out expected in early 2000
American
Express
Membership
Banking
Aug.
American
Express
expects to attract customers from American
Express’s 35 million cardholder base
PCbanker.com4
Sept.
service mark
of American
Bank (Lehigh
Valley, PA;
$100 million)
currently a single branch community bank,
but have announced their intention to raise
$10 to $15 million in an IPO to launch as a
“nationwide community bank” using its
pcbanker.com URL and service mark; Mark
Jaindl is CEO, (888) 366-6622
G&L Bank
Oct.
private
start-up targeting the gay community
Pennsylvania
Business Bank
p. 27
Oct
private
regional business bank
DirectBanking
p. 24
Nov.
Salem Five
Net-only division of online banking pioneer,
Salem Five, which has been active on the
Web since early 1995
10,000 total
2/00
X.com
p. 29
Nov.
private
soft launch in Nov. 1999; banking services
provided in partnership with First Western
National Bank
250,000 total
3/1/00
everbank.com
p. 12-16
Nov.
joint venture of soft launch in late 1999; grand opening Jan.
Customer One 11, 2000
Financial and
Wilming-ton
Federal
Savings
National
InterBank
p. 26
Dec.
First National
Bank of
Mitchell,
Indiana
page 19
Brothers Richard and Randall Waterfield
launched bank in December; official opening
was Feb. 8, 2000
FTE
$43 M
17
$8 M
1/15/00
25
318% above
projections
6,000 total
2/00
30
Number 57 & 58
Bank of Dreams
Net-Only Bank Launches Scheduled for First-Half 2000
Launch
Name
Month
Ownership
Notes
2000 (10 announced; another 30 to 40 are expected by year-end)
1st WebBankDirect
TBD
Sovereign Bank
positioned as a co-branded affinity bank (below)
AccessNationalBank TBD
private
founder is from Patriot Bank (p. 21)
Aerobank
TBD
Aerofund Financial
subsidiary of a commercial factoring company (p. 21)
Clarity Bank
March
private
told American Banker in Feb., they would be virtually fee-free, relying on
lending for profits (p. 21)
BankZip
early 2000 private, spin-off from
unique franchise concept targeting Community Banks (p. 23)
Patriot Bank
Momentum Bank
May
wholly owned by
Billing themselves as “first technology bank” they have an advantage
Momentum Cash Systems, over other branchless banks in the fact that they own 800 ATMs in eight
an independent ATM
southeast states; <www.momentumcash.com> and
deployer,
<momentumbank.com>
TB.com Bank
TBD
private
founders are from Jefferson Bank (p. 27)
TheBizBank
TBD
Cole Taylor Bank
has been in formation since mid-1999 (p. 28)
Ubiquity Financial
Jan.
Fraser Valley Credit Union division of Canadian credit union (p. 28)
Virtual Bank
Apr. 6
private
OTS approval 2/11/00; just announced a $37.5 million venture investment
(p. 28)
Source: All 9/30/99 data is from the FDIC including assets, deposits, number of deposit accounts, and FTE (full time equivalent employees); more recent data,
if applicable, is from company reports; e = estimated
Notes:
(1) Does not include pure lenders such as E-Loan or People First Finance; brokers such as Schwab, or bill-payment-only companies such as PayTrust; does
not include an estimated 50 to 100 banks in various stages of formation.
(2) The only standard metric at this time is number of accounts, not number of customers; many customers have multiple accounts, e.g., a customer with a 6month CD, a 12-month CD, a checking account, and a money-market account has four accounts; as a rule of thumb figure the total number of customers
is about 50% of the account total, but this could vary widely.
(3) As of 9/30/99, unless stated otherwise
(4) Internet banking was added to the services of the parent, American Bank of Lehigh Valley in Sept. 1999, but hasn’t been marketed as Net-only yet.
The Class of 2000: First Wave
(launched in second-half 1999 or first half-2000 – alphabetic order)
Type: Division of Sovereign Bank ($24.6 billion)
1stWebBankDirect
www.1stwebbankdirect.com
HQ: Wyomissing, PA
President: Cliff Lavin
Status: In formation; the most talked about unlaunched
startup, garnering press attention since announcing
Internet initiatives in March 1999; no announced launch
date, parent may be occupied with acquisition of 268
branches and 532 ATMs from Fleet.
Strategy: To offer co-branded Net banking through
affinity groups such as universities, community
groups, employers, and retailers.
Service Providers/Software Platforms: Net banking
platform from S1; bill payment from Checkfree;
account approval algorithms from Equifax; core
processing from Fiserv; call center and account
servicing platforms from Unisys.
1stwebbankdirect is soliciting affinity partners
directly from its Web site.
page 20
Number 57 & 58
Bank of Dreams
Mini-Analysis: We trust the bank has more up its
sleeve than just affinity marketing, which has some
serious weaknesses:
• most affinity groups already have credit card
partners, one of the major retail banking profit
drivers; for example, MBNA alone has more than
4,000 affinity partnerships
• for banking services, many affinity groups are
well-served by credit unions delivering a
compelling package of local convenience,
personal service, low prices, and online banking
• major e-tailers will demand an equity kicker as
part of any deal; for example, Amazon.com
received warrants for 4.4 million NextCard shares
as part of its co-branded credit card deal
A final observation: The name is too hard to
remember and type. It strings together four generic
concepts: 1st, Web, Bank, and Direct; that’s at least
two too many.
Status: Application for a national bank charter filed
with the OCC Feb. 16, 1999; preliminary approval
received June 8, 1999; doors opened in early 2000.
Target Market: Small business with revenues of $15
million or less in the greater Washington
Metropolitan market with a special emphasis on the
high technology community of Northern Virginia.
Strategy: Blend of Internet delivery with a minimal
brick-and-mortar presence; a single full-service
branch will operate in Chantilly, VA. Access
National will merge with residential lender Mortgage
Investment Corporation, headquartered in Vienna,
VA, concurrent with the opening.
Funding: An IPO is planned
Contact:
14006 Lee Jackson Memorial Hwy.
Chantilly, VA 20151
(703) 871-2100
Contact:
201 Penn Street
Reading, PA 19601-4038
(610) 520-7000
AeroBank
www.aerobank.com
AccessNationalBank
www.accessnationalbank.com
Type: Division of non-bank financial services
company, Aerofund Financial, a San Jose, CA
factoring company
HQ: San Jose, CA
CEO: Scott Racusin, previously with Security Pacific
Bank (13 years) and Union Bank (12 years)
Status: Launch planned for Q2 2000; AeroBank is
just the fourth national bank to be approved by the
OCC for national electronic delivery; the first was
CompuBank in Oct. 98, the others are NextBank, a
limited purpose bank accepting jumbo (<$100,000)
deposits only, and CIBC National Bank of
Maitland, FL, a division of CIBC (Toronto,
Canada)
AccessNational touts 24-hour commercial real estate
loan approval on its home page.
Target Market: Small business
ð
Type: Start-up clicks and mortar
HQ: Vienna, VA
Founder: Michael Clarke, CEO, ex-Patriot Bank
associate of Millennium Bank’s Carroll Markley, p.
25.
page 21
Number 57 & 58
Bank of Dreams
Strategy: Integrating Net delivery with human loan
officers
Funding: In the process of raising $18 million
Goals: 10,000 accounts by 12/31/2000; profitable
within 3 years
Mini-Analysis: With the experience and client base
of Aerofund Financial, this bank has a real chance to
reach a critical mass of customers.
Contact:
2787 Moorpark Avenue
San Jose, California 95128
(408) 241-2462
Strategy: Affinity-based co-branded marketing
programs such as the one with Excel
Communications <excel.bankdirect.com>.
Mini-Analysis: First impressions are good: catchy
name/logo; excellent graphical layout; good, concise
copy; and so on. But they need to work on
navigation. The biggest deficiencies: no links to the
online demo except on the login page; Learn is a
confusing name for company information; it’s
unclear what the difference is between “manage” and
“access,” which are both password protected but
apparently not integrated.
The bank also needs to work on the loan side,
currently delivered on a co-branded basis via
Lending Tree. While that is a good approach for
low-margin installment loans (mortgages, auto
loans), the company needs revolving credit products,
especially an overdraft line of credit. Overdraft credit
lines are a must-have feature for serious transaction
accounts and they can be big moneymakers for the
bank.
BankDirect
www.bankdirect.com
BankDirect’s excellent home page includes links to both
ABAecom and VeriSign’s site certification programs.
Type: Wholly owned subsidiary of Texas Capital
Bank ($297 million) which launched its brick and
mortar bank concurrently with BankDirect
HQ: Dallas, TX
Size: 7,000 total accounts 2/15/00, more than double
the 3,000 accounts as of 10/27/99
Some other interesting features:
• rate comparisons
• email signup on home page
• customer service contact forms
• small animations on Apply and Login draw users
attention to these important functions
• Coming Soon says they are working with
PalmCentral.com to develop Palm banking
and WarrantySuperstore.com
• InsWeb for insurance
• pop-up customer service forms in five categories:
- Have a CSR call me
- Ask a question
- Make a comment
- Report a problem
- Refer a Friend
Contact:
4230 LBJ Freeway
Dallas , TX 75240
(214) 890-5835
Top Execs: Rose Hultgren is President,
Joseph Grant is CEO
Status: Launched in March, 1999, but have not
committed major marketing dollars; planning an IPO
spinoff in 2000.
page 22
Number 57 & 58
Bank of Dreams
venture. On Dec. 14, 1999, BankZip completed a
private placement of $5.44 million of common stock
and convertible debentures bringing total
capitalization to $10.44 million. Through Dec. 14,
BankZip has incurred $4.85 million in pre-tax cash
and noncash charges that were expensed in Patriot’s
fourth quarter results.
BankZip
www.bankzip.com
Patriot’s ongoing relationship with BankZip is
limited to ownership of convertible debentures to
acquire 5 million shares of BankZip.com at no
further cost. An initial public offering is expected in
the year 2000.
BankZip, “The World’s First Internet Banking Alliance”
is worth a look.
Marketing: Last fall, the company talked about
raising enough capital in an IPO to fund a $70
million marketing campaign to build the brand and
attract users. The strategy has been scaled back a
bit, but the bank still plans an aggressive
marketing campaign.
Other Domain Names Owned
insurezip.com
investzip.com
zipthis.com
loanzip.com
cashzip.com
moneyzip.com
atmzip.com
marketzip.com
americase-bank.com (America’s E-bank)
Type: Spinoff from Patriot Bank ($1.1 billion);
alliance of community banks; see funding right.
HQ: Pottstown, PA
Source: Network Solutions, 11/99
Top Exec: Richard A. Elko, President
Status: In formation with early 2000 launch planned;
beside founder Patriot, three other banks have signed
on, Madison Bank (Blue Bell, PA; $158 million),
First Penn Bank (Philadelphia, PA; $81 million),
and IGA Federal Savings Bank Feasterville, PA;
$190 million) all based in eastern Pennsylvania.
Target Market: Through community bank
franchisees and equity owners, the banking
consortium hopes to reach a nationwide audience.
How it Works: BankZip’s unique business calls for
creating a co-branded “portal” licensed to community
banks throughout the nation. Users attracted to
BankZip.com through national advertising enter their
zip code (hence the name) and are directed to the
participating community bank licensing that zip code.
If no bank has locked up a particular zip code,
revenue from the user is shared by all affiliates.
Mini-Analysis: Talk about thinking outside the box
—and with $5 million on the table! This concept is so
unique and unprecedented, we don’t quite know how
to react. It could be a huge winner. Or not. Originally,
we were skeptical, but after a long discussion with
Elko and Joe Major, CEO of Patriot, at BAI’s Retail
Delivery we came away impressed with their
knowledge, drive, and enthusiasm. They might just
be able to pull it off. But they definitely need to
spruce up the Web site, it’s outdated and doesn’t
inspire confidence in the venture’s ability to create a
compelling Web bank.
Contact:
High and Hanover Street
Pottstown, PA 19464
(610) 970-4650
One drawback: New users, even those coming into
the system from a participating community bank,
must transfer their accounts into the BankZip system.
Affiliates handle customer service only.
Funding: BankZip was a wholly owned division of
Patriot Bank, which invested $5 million in the
page 23
Number 57 & 58
Bank of Dreams
Contact:
2975 Westchester Avenue
Purchase, NY10577
(914) 701-2000
[email protected]
Clarity Bank
www.claritybank.com
Clarity Bank Management Team
Name
David Arzi
Michael Szwajkowski
Scott C. Schwartz
William F. Weaver*
Dr. Aviv Orani
Jon Walker
Peter Quinlan
Michael Watkins
Position
CEO
President
EVP
EVP
CIO
Dir., Alliances
VP, Controller
VP, Technology
Email
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
Source: company, 12/99
*formerly President of Bank CEO of Hartford-based Advest Bank and
Trust Co., a subsidiary of the Advest Group Inc. which in May 1999, sold
its retail and commercial banking businesses
Clarity’s Web site placeholder has a modern look.
Direct Banking
Type: Start-up, acquiring existing bank
www.directbanking.com
HQ: Purchase, NY (home of MasterCard)
CEO: David Arzi
Type: Wholly owned subsidiary of Salem Five Cent
Savings ($1.1 billion), one of the first banks with a
Web site in 1995
Status: Formed in June 1999; launching in March
2000, following the completion of its acquisition of
First National Bank (Uvalde, TX; $28 million).
HQ: Salem, MA
Target Market: Small business initially, then
consumer
Top Exec: William H. Mitchelson is CEO of Salem
Five; former directbanking.com head Mike Fitzgerald
was hired in January to be President of Net.B@nk
Status: Launched in Nov. 1999
Business Model: More focused on loans than
transaction fees
Funding: Wholly-owned subsidiary of Salem Five
Strategy: Will offer a full line-up of business and
consumer services with bilingual (English and
Spanish) delivery; an ecommerce mall will feature
offerings from its small business clients and other
Web sites that refer users to Clarity Bank; mall usage
will be boosted with a cash-back credit card good at
mall merchants.
Marketing Plan: A $1 million launch effort is
planned, including a 750,000-piece direct mail, onand off-line media; also soliciting associates who will
earn $20 per customer sign-up.
Mini-Analysis: Salem Five has been an innovative
pioneer, winning our First Best of the Web in 1997
(OBR 30, p. 9); if they can harness this innovation in a
Net-only subsidiary, it could be very successful; a wild
card is the loss of its top exec to Net.B@nk
Contact:
210 Essex Street
Salem, Ma 01970
(978) 720-5325
Funding: $14 million in venture funding raised to
date; planning an IPO this year.
Goals: 50,000 accounts “in the near future”
Mini-Analysis: Sounds great on paper; but will have
to be careful not to overextend trying to be all things
to all people all at once.
page 24
Number 57 & 58
Bank of Dreams
bank. Pending OTS approval, the network would be
initially available in fourth quarter 2000.
eBank
www.ebank.com
Mini-Analysis: Now we understand why eBank
execs kept avoiding our questions about last summer.
They were in the midst of receiving a major slap on
the wrist from the OTS, to the tune of $100,000, for
announcing their Internet strategy prior to OTS
approval. But that appears to be all behind them now,
and the bank has reeled off an impressive list of
strategic alliances.
Ebank has the best domain name in the business, now
they need to build a company that can leverage it.
Type: Public (EBDC), clicks and mortar
HQ: Atlanta, GA
They certainly have the right name, although investors
have been skittish given the bank’s troubles with
regulators. The stock trades about 15% under its $10
IPO price (7/98) and the company’s $12.5 million
market cap (2/10/00) isn’t all that much higher than
what the domain name alone might bring, based on
Bank of America’s purchase of loans.com for $3
million in January.
Contact:
2410 Paces Ferry Road, Suite 190
Atlanta, GA 30339
(770) 801-0355
[email protected]
Size: $55 million in assets, $43 million in deposits,
1,078 deposit accounts (9/30/99)
Millennium Bank
CEO: Richard A. Parlontieri
www.thenetbanker.com
Status: Southeast Commerce Holding Company was
organized Aug. 1997 to serve a holding company for
Commerce Bank; completed IPO July 1998; began
operations Aug. 1998; in May 1999 acquired domain
name ebank.com, changed its name to ebank.com,
and announced Internet strategy; shortly thereafter
the OTS found that the bank violated its charter by
materially altering its business plan without prior
approval of the OTS; the bank paid a $100,000 fine
in Sept. 1999 and subsequently had its Internet
business plan approved.
Strategy: Originally the company planned to open a
nationwide network of ebank.com centers in highpotential markets. Those plans have been scaled back
to just three ebank centers in 2000, Atlanta, Charlotte
and Tampa. To achieve the personal service the
company believes is essential to successful
commercial lending, the bank plans to partner with
community banks around the country. The bank
recently announced (1/31/00) an alliance with
Talisman Technologies to deploy a network of
Internet-enabled ATMs that would connect to the
page 25
Millennium Bank offers a full range of services
including a brokerage.
ð
Number 57 & 58
Bank of Dreams
Type: Start-up, privately held
Type: wholly-owned subsidiary of First National
Bank of Mitchell (IN), a $48 million bank owned by
Waterfield Bank Corp.
HQ: Reston, VA
CEO: Carroll Markley, previously with Patriot Bank,
parent of BankZip.com (p. 23)
Status: Announced Dec. 1998, raised $8.3 million
and opened April 1, 1999, under a national charter
Mini-Analysis: Millennium Bank
<www.thenetbanker.com> put a “the” in front of the
URL we’ve been using since Nov. 1995,
<www.netbanker.com>. In general, “the” domain
names are second-tier, it kind of makes you wonder
why they couldn’t afford a real domain name. It’s
also confusing to customers and vendors who tend to
forget “the” and type netbanker.com instead. We
know, we get interesting email destined for
“thenetbanker.com,” resumes, gossip, and so on. See
p. 48 for more on domain names.
Also, we question how Web-savvy the company is.
They have never approached us about forwarding
misdirected email. We weren’t even aware there was a
“thenetbanker.com” until researching this report.
Contact:
1601 Washington Plaza
Reston, VA 20190
(703) 464-0100
HQ: Mitchell, IN
CEO: Randy Waterfield
Status: Launched Dec. 1999; the bank was founded
by the Waterfield brothers, Randy and Richard,
formerly of Goldman, Sachs. Banking has been in
the family since their grandfather founded Waterfield
Mortgage Company in 1928. Later their father ran the
mortgage company and acquired Union Federal
Savings Bank of Indianapolis.
Target Market: Consumers
Strategy: Use best-of-class technology to provide
superior services; E-Loan provides mortgage and
home equity lending services
Mini-Analysis: The bank has done a good job of
getting their name around the Web and on various rate
comparison sites. But so far, its service offering is
sparse and undifferentiated. They have their work cut
out for them, as do all new Net-only banks.
Contact:
P. O. Box 1245
Indianapolis, IN 46206-1245
(877) 468-7265
[email protected]
National Interbank
www.nationalinterbank.com
NextBank
www.nextbank.com
Type: Affiliate of NextCard, the first Net-only credit
card company launched in Dec. 1997; parent is public
(NXCD) with market cap = $1.1 billion (2/29/00);
IPO May 1999; Amazon holds a warrant to purchase
4.4 million shares for $39
HQ: San Francisco, CA
CEO: Jeremy Lent
Size: NextCard has more than $500 million in assets
from 275,000 credit card accounts (2/28/00);
NextBank has $314 million in deposits (9/30/99).
Target Market: Consumers using credit cards and
the Internet.
National Interbank, a division of First National Bank of
Mitchell, Indiana, launched at year-end.
page 26
Number 57 & 58
Bank of Dreams
Status: NextCard purchased Textron National Bank
in 1999; it is expected to eventually provide the base
for a full line of retail banking products; but currently
NextBank’s Web offering is limited to jumbo CDs
(<$100,000) and a link to NextCard credit cards.
Strategy: Credit card product and infrastructure
optimized for the Internet; consistently one of ten
largest Net advertisers; adding value around Internet
transactions which is expected to lead them into debit
transactions/checking; statement aggregation and so on;
co-branding with Amazon.com and others
Mini-Analysis: We have been impressed with
NextCard ever since we first talked to them in early
1996; lately, they have been downplaying their
interest in “traditional” Net banking, claiming to be
more interested in Internet transactions than retail
deposits; time will tell if that’s merely a head-fake.
The relationship with Amazon.com could be used to
develop interesting statement aggregation and
person-to-person payment schemes leveraging
Amazon.com’s 16 million customers and patented
one-click payment mechanism.
Top Exec: Alan Fellheimer
Status: Bank founded, Mar. 1999; Net banking
launched Oct. 1999; commercial loans added, Dec.
1999; operates under Pennsylvania Bank Charter with
FDIC insurance
Target Market: Business
Strategy: Offers a full line of commercial, small
business, and personal products, but clearly is
targeting the business customer; Web site from
Digital Insight; also uses <www.bizbank.org>.
Contact:
7 Penn Center, 1635 Market Street
Philadelphia, PA 19103-2217
(215) 587-2200
[email protected]
TB.com Bank
domain name not registered
Type: Start-up, private
HQ: Wilmington, DE
Contact:
595 Market St, Suite 950
San Francisco, CA, 94105
(415) 284-9217
Top Exec: Frank Mastrangelo, President/COO,
formerly Jefferson Bank CTO
Status: In formation
Pennsylvania Business Bank
Strategy: TB.com Bank is expected to be an allInternet operation with a private-label banking
relationship targeted to affinity groups such as
universities and trade associations.
www.pabizbank.com
Funding: The Cohen family is creating a new
Internet bank to add to its financial dynasty which
included JeffBanks Inc., sold Dec. 1, 1999 to
Hudson United, and Resource America.
Bancorp.com is the holding company for TB.com
Bank, which is being organized in Delaware, with
Edward E. Cohen as Chairman and his son, Daniel G.
Cohen as CEO; applied for a state charter Sept. 13.
Edward Cohen is CEO and Daniel Cohen is COO of
Resource America, a Philadelphia-based specialty
finance company.
The three circular graphics on the home page reveal
product menus when a mouse travels over them.
Type: Start-up, private
HQ: Philadelphia, PA
page 27
Number 57 & 58
Bank of Dreams
TheBizBank
www.thebizbank.com
Type: Wholly-owned subsidiary of Cole Taylor Bank
($2.0 billion)
HQ: Chicago, IL
Top Execs: Craig S. Dean, CEO; Dan Bleil, EVP,
Relationship Management
Virtual Bank is adding statement aggregation
from VerticalOne.
Status: Building a state-of-the-art product line
Type: Click-and-mortar start-up, VC funded
Contact:
1333 Butterfield Rd., Suite 555
Downers Grove, IL 60515
(630) 493-1531
[email protected]
HQ: Palm Beach Gardens, FL
Founders: Rory Brown, CEO; Bill Decker, President
Ubiquity Financial
www.ubiquityfinancial.com
Type: Division of Fraser Valley Credit Union
($500 million; 47,000 members)
HQ: Abbotsford, British Columbia, Canada
Top Management: Larry Davey, President
Status: Launched in Jan. 4, 2000; has attracted 400
accounts in its first month; uses Prologic platform
Target Market: The CU expects 10 to 15% of the
parent’s members to join, representing 5,000 to 7,000
members; also eyeing the 150,000 Canadian
customers of ING Direct.
Strategy: Paying higher rates than its brick-andmortar parent; plans to advertise on iMoney.com, a
Canadian financial portal.
Status: Launching April 3, 2000; looks to be a major
player after landing a first round investment in Feb.
of $37.5 million from venture capital firms J.H.
Whitney, Palisade Capital Management, and
Wyndcrest Partners; General Electric,
DaimlerChrysler, DLJ, MCI Worldcom CEO
Bernie Ebbers, Starwood Hotels CEO Barry
Sternlicht, and Miami Dolphins quarterback Dan
Marino; uses Prologic platform.
Strategy: Targeting employees in the high-tech industry;
plans to open offices in 12 high-tech areas in the next 18
months, including Silicon Valley, Austin, New York,
and Boston; could very well be the first retail bank with
statement aggregation (VerticalOne).
Contact:
2000 PGA Blvd., Suite 3110
Palm Beach Gardens, FL 33408
Virtual Bank Domain Name Holdings
virtualbank.com
1vcharge.com
1vmortgage.com
Comments: The name is a bit cumbersome.
Contact:
32071 South Fraser Way
Abbotsford, B.C., V2T 1W3
(604) 850-0999
myvirtualbank.com
1vauto.com
1vloan.com
Source: Network Solutions, 11/99
Virtual Bank
www.virtualbank.com
page 28
Number 57 & 58
Bank of Dreams
Target market: Consumers
X.com
www.x.com
Goal: 500,000 accounts by mid-year
Strategy: viral marketing with $20 sign-up bonus
(promotion ended Feb. 18); Internet person-to-person
payments including co-branded auction payment
product with AuctionWatch.com (p. 5); no minimum
S&P index fund with no management fees and a 1
basis point contribution by the company
Funding: Sequoia Capital led the first round of
$25 million; a second round is expected in March;
followed by an IPO in 2000, which Elon Musk said will
be the biggest Internet IPO this year (see The Industry
Standard, March 6, 2000, 86-87,
<www.thestandard.com/article/display/0,1151,12192,00.html>).
X.com’s Web site is typical Silicon Valley, full of
selling messages and devoid of pictures.
Type: Start-up; VC funded; banking services provided
through partnership with First Western National Bank
(La Jara, CO, $48 million), a subsidiary of Community
Bankshares, Inc. (Colorado)
HQ: Palo Alto, CA
Top Execs: Bill Harris, CEO (formerly Intuit CEO);
Elon Musk, Founder
Status: Soft-launch Nov. 30, 1999; P2P payments
launched Dec. 15; during Feb. became largest Netonly bank as measured by number of accounts,
50,000+ on Mar. 1; announced merger with PayPal
on Mar. 2; became most-visited bank in the USA in
Feb. with 1.8 million unique visitors (p. 5); first
public bank victim of cyberthieves (p. 6)
Mini-Analysis (see footnote p. 5): Although, it’s
very early in the game, X.com appears to be the first
company, other than Palo Alto neighbor and merger
partner PayPal, following the strategy we’ve been
expecting for some time, that of a truly virtual bank
working in tandem with the customer’s local bank
and checking account (for more on this strategy, see
Building the Amazon.com of Financial Services
OBR 38/39, and Virtual Checking Accounts OBR
50/51).
They are also the first retail banking entrant to go after
eyeballs rather than selling single products such as
high-rate deposit accounts (Net.B@nk, Telebank);
credit cards (NextCard, Wingspan, Providian); or
mortgage loans (E-Loan, Mortgage.com). Cranking up
the registered user base and Web traffic has been the
formula for dot com success on Wall Street, so it will
be interesting to see how it plays out in the banking
sector.
continued from p. 6
Markoff reported that at least one person
successfully defrauded an account in this manner.
However, X.com CEO, William Harris, said that
only five to 10 transfers among thousands handled
by X.com were “problematic.” The processing flaw
was quickly corrected after it was brought to light,
but it was in place for about a month.
other than to reiterate NACHA’s policy that it is up to
the initiating financial institution to authenticate
transactions and that we could “draw our own
conclusions.” I believe that is called “damning with
faint praise.” In any event, the mini-fiasco doesn’t
seem to have slowed X.com, which hit 250,000
customers by Mar. 1.
What the article fails to point out is that this was not a
new “security hole,” but simply a thief exploiting a
known weakness in the ACH system that could have
been perpetrated at dozens of places online. We
contacted NACHA for comment, but they weren’t
willing to discuss the specifics of the X.com case,
page 29
Number 57 & 58
Bank of Dreams
U.S. Net-only Bank Ratings
1
Bank
American Bank
<pcbanker.com>
Gomez
Winter 2000
0-10 with 10 best
Gomez1
Fall 1999
0-10 with 10 best
Smart Money3
June 1999
Rank
Bank Rate
Score (Month)2
1-4 with 4 best
Top9.com4
Rank/Month (traffic)
Based on Web traffic
overall #37 at 5.23
overall cost #6 at 9.27
overall #13 at 6.27
overall #19 at 6.02
overall #16 at 6.17
overall #5 at 6.68
overall #12 at 6.28
not rated
overall #10 at 6.32
overall #4 at 6.74
not rated
not rated
overall #40 at 5.19
not rated
overall #7 at 6.46
not rated
not rated
not ranked
not listed
overall #14 at 5.61
overall #33 at 4.78
overall #28 at 5.07
overall cost # 19 at 7.33
overall #6, at 5.97
overall #11 at 5.77
not rated
not rated
not rated
not ranked
American Express is #4 on the credit
card list (1,326,000)
3.5
(August 1999)
3.0
(August 1999)
3.0
(January 1999)
not rated
not ranked
not listed
#2 (refers to
Citibank)
Citibank is #3 (850,000), but Citi f/i is
not broken out
#1
#10 Jan 00 (337,000)
not ranked
not listed
not rated
not rated
not ranked
not ranked
not listed
not listed
overall #4 at 6.34
not rated
not rated
not rated
#15 (tied with Bank
One)
not listed
not ranked
not ranked
not ranked
not listed
not listed
not listed
not rated
overall #3, at 6.41
3.5
(April 1999)
not rated
not rated
3.0
(May 1999)
not rated
3.5
(February 1999)
not ranked
#5 (tied with Crestar)
NextBank
not rated
not rated
not rated
not ranked
OneCore.com
Principal Bank
SFNB
not rated
not rated
overall #1 at 7.47
not rated
not rated
overall #1 at 7.16
not rated
not rated
3.5
(June 1999)
not ranked
not ranked
#4
Telebank
overall #27 at 5.55
overall #18 at 6.06
overall #23 at 5.81
overall #2 at 7.10
overall #16, at 5.44
overall #20, at 5.36
overall #9 at 5.82
overall #5 at 6.17
3.0
(October 1999)
not rated
#10 (tied with Bank
of America)
not listed
#9 Feb 00 (361,000)
#2 Dec 99 (1,005,000)
#3 Nov 99 (862,000)
parent NextCard is #1 on the credit card
list, and #77 across all Web sites
(4,784,000)
not listed
not listed
#10 Feb 00 (346,000)
#9 Dec 99 (428,000)
#1 Nov 99 (1,125,000)
not listed
not ranked
not listed
3.0
(February 1999)
4.0
(July 1999)
#7 (tied with Key
Bank & Wachovia)
not listed
not ranked
not rated
not rated
not rated
not ranked
#8 Feb 00 (397,000)
#9 Jan 00 (352,000)
#7 Dec 99 (529,000)
#7 Nov 99 (664,000)
#1 Feb 00 (1,797,000)
#7 Jan 00 (525,000)
American Express
Banking
Bank Direct
citi f/i
CompuBank
DirectBanking
eBank
everbank
First Internet Bank of
Indiana
G&L Bank
Millennium Bank
nBank
National InterBank
Net.B@nk
USA Bancshares
USAccessBank
WingspanBank
X.com5
Notes:
(1) Gomez Advisors’ <www.gomez.com> rankings are based on over 150 criteria spanning five categories: Ease of Use, Customer Confidence, On-Site Resources, Relationship
Services, and Overall Cost.. The Internet Banker Scorecard reviews banks that allow customers to view their checking accounts, transfer money and pay bills on the Web; Gomez
currently focuses on Internet-only banks (of any size) and traditional banks with $5 billion or more in retail (not total) deposits. Scale is 0-10, with 10 being a perfect score. In the
Overall Cost category, a score of 10 indicates the lowest cost.
(2) BankRate.com reviews site content, design, and interaction. Scale is 1 to 4 points, with 4 a perfect score.
(3) Smart Money ranked 19 banks based on Web site information, products and services, security, customer service, and fees. The 19 banks invited to participate in the survey were
the 13 largest consumer banks based on deposits and 6 Internet-only banks.
(4) Top9.com ranks banks according to number of unique visitors in a given month using unique visitor totals from PC Data.
(5) X.com is incorrectly categorized on Top9.com as a “Professional Service.” For our table, we’ve reclassified them as a Bank and renumbered accordingly. X.com totals do not
include PayPal, which had 1.1 million visitors in Feb.
page 30
Number 57 & 58
Net-Only Banks
Net-Only Bank Product Matrices
The following 16 pages contain the results of our research into the product offerings
of the Net-only banks. Personal and business accounts are shown separately.
Index
Page
31-33
34-36
37
38-39
40-41
42
43-46
Description
Product line overview
Personal checking
Business checking
Personal savings
Personal checking price comparison
Business savings
Misc. Fees
Product Overview
Bank
American
Express
Membership
Banking
Personal Products
Business Products
Checking, Interest Checking, Money
Market Account, CDs (3-60 months),
Overdraft Line, Line of Credit
Restrictions and
Comments
Customer Service
Hours (human)
1) ATM surcharge rebates,
(888) 356-1006
4x per month up to $1.50 ea.
24/7
2) Free ATM usage at
4,200 Amex ATMs
3) Free bill pay
Bank Direct
citi f/i
CompuBank
DirectBanking
Checking with Interest, Regular Savings,
Money Market Account, CDs , Bill Pay
Service
(877) 839-2737
24/7
Checking, Basic Checking, Savings,
Money Market Account, CDs , Personal
Lines/Loans, HELOC (revolving/fixed),
Investment Account, Insurance, Bill Pay
Basic Checking, Interest Checking,
Savings, Money Market, CDs
Checking, Checking with Interest, Money
Market , CDs , Mortgage loans, HELOC
1) Investments: $19.95 per
trade, up to 5,000 shares
(800) 2-citifi
24/7
2) Insurance: Instant
quotes for auto, term life,
medical
Business Checking, Business
Savings, Business Money
Market , Free bill payment,
Overdraft Protection
(888) 479-9292
Business services (only in
Massachusetts)
(888) 666-5500
24/7
custsvc@compubank
.com
no hours listed
mail@directbanking.
com
eBank
page 31
ePremium Checking, ePlus Checking,
PrimeTime Checking (50+), eValue
Checking, eSavings, Christmas Club,
eMoney Market, IRAs 6-60 months, CDs
3-60 months, Visa/Mastercard, BancLine
Secured Loan, HELOC/OD protection
“coming soon”, Mortgages , Bill Pay (free
six months then $5.95)
Small business eSweep , Small
business checking, Small
business eMoney Market, Small
business eSavings
eSweep linked to
investment account
$75/mo
(888) 278-9898
Mon-Fri: 8 am to 7
pm EST
Sun: noon to 4 pm
EST
Number 57 & 58
Net-Only Banks
Bank
everbank
Personal Products
Business Products
e/Checking Account, Ever Miles Reward
Visa , Private Line Overdraft , EverTrade
Direct
Restrictions and
Comments
1) ATM surcharges
reimbursed, but requires
receipts mailed within 90
days (max. 4 or $4/mo)
Customer Service
Hours (human)
(888) 882-3837
24/7
[email protected]
2) $19.95 for trades
First Internet
Bank of Indiana*
Regular Checking, Money Market
Savings, CDs , IRAs, Mortgages (via ELoan), LOC, Installment loans, Overdraft
LOC, HELOC, Connect Visa
Savings, Business Money
Market
(888) 873-3424
or Chat Now icon
8 am to 8 pm EST
customerservice
@firstib.com
G&L Bank
Campus Pride, Easy Checking, Lifestyle
Account, Equality Account, Platinum
Relationship Account, Senior First (soon),
Easy Savings, Money Market Savings,
KIDZ Accounts, CDs , IRA , Easy Link
OD Protection – Savings, Easy Reserve
OD LOC
Venture Business Account,
Capital Business Account,
Success Business Account,
Installment loans (secured)
(888) 226-5429
Mon-Fri: 8 am to 8
pm CST
Sat: 10 am to 3 pm
CST
customerservice@
glbank.com
Millennium Bank
nBank
Deluxe Checking II, Free Checking,
Regular Savings, Next Generation Savings
(kids), IRAs, CDs , Money Market 2000,
Personal Loans (auto), Mortgage,
HELOC, OD Protection
Small Business: The Starter,
Small Business: The Next Step,
Small Business: The Max,
Commercial Account, Zero
Balance Account, Business
NOW, Small Business Savings,
Internet Banking for business,
Business loans (single pay,
revolving LOC, term loan,
commercial mortgage, SBA and
government), Business leasing,
Business Online, Merchant
Services
nBank Checking, nBank Checking/ISP
Combo, nBank Checking +, nBasic CD,
Hot CD, Equity Loan/Line, Mortgage, Bill
Pay
Commercial Checking,
Commercial MMA,
National
InterBank
Interest Checking, Money Market
Savings, CDs , Visa Platinum/Classic,
Free Bill Pay, ATM, Mortgage, HEL,
Auto loans
Net.B@nk
NetValue Checking, SuperValue
Checking, NetVantage Money Market
Account, CDs , Home equity lines/loans,
NetBank Platinum Visa, NetBank
NetWorth Investor Account (through
Uvest Investment Services)
NextBank
703-464-0100 no
hours
services@the
netbanker.com
1) Checking/unlimited ISP
Combo for $14.95/mo
(800) 332-8231
no hours listed
2) Online merchant
services
Visa is mileage reward
card
877-468-7265
no hours listed
(888) 256-6932, x3
Mon-Fri: 6 am to
midnight EST
Sun: 1 pm to 10 pm
EST
CDs 1-24 months
$100,000 minimum
877-879-3353
10 am to 6 pm EST
[email protected]
page 32
Number 57 & 58
Net-Only Banks
Bank
Personal Products
Business Products
OneCore.com
PC Banker
Principal Bank
SFNB
Telebank
USA BancShares
Restrictions and
Comments
Business QuickStart Account,
Performance Account, Money
Market Account , Bill Payment,
Payroll, 401(k) Services,
Merchant Services, Leasing,
Loans, Credit card services
American eChecking, American
Checking, American Gold Checking, CDs,
Statement Savings, IRA statement
savings, Personal MMA, Premium MMA,
Personal loans/lines, HELOC, LOC,
Secured loans, Mortgages, Online
brokerage
Interest Checking (Sole
proprietors), Community
Checking (not-for-profit
organizations), Business MMA,
Business Premium MMA,
Commercial Loans, Escrow
Customer Service
Hours (human)
(888) ONE-CORE
24/7
Interest checking pays
6.25% up to $10,000
(888) 366-6622
Mon-Fri: 8 am to 6
pm EST
Sat: 9am to noon
EST
[email protected]
Checking Account, Savings Account,
Beginner’s Savings (children), Money
Market Deposit Account, CDs , College
CD (matures on 18th birthday), Student
Loans, Home equity loans and lines,
Secured consumer loans (auto), Visa
Platinum/Classic
(800) 986-3343
Internet Checking Basic, Internet
Checking Interest, Royal Embassy
Services Standard, Royal Embassy
Services Premium, Money Market
Account, Basic Savings, Visa Check
Card/ATM card, CDs , Overdraft
Protection
(800) 736-2321
True.net checking, Smart Saver, Money
Market Checking, CDs , Loans,
Investments
(888) 989-4422
Mon-Fri: 7 am to 9
pm CST
24/7
[email protected]
no hours listed
EnergyOne Checking, Savings, CD (3-60
months), Credit card, Investments
1) Rebate of 5 ATM
surcharges of $2.00 or less
for both checking and
savings
877-482-2650
24/7
Live Person Chat
[email protected]
USAccessBank
WingspanBank
Savings Account, Money Market Account,
CDs , Overdraft Protection, Personal loans
secured/unsecured, Personal lines of credit
Small Business Checking,
Business Loans, unsecured and
secured, Business Lines of
Credit
Checking, Bill Pay, ATM/Debit card, CDs
, Visa Platinum , Installment loans, OD
protection, Brokerage , Insurance
877-369-2265
7 am to 10 pm EST
[email protected]
1) ATM surcharge rebate
up to $5/month
(888) 736-8611
24/7
2) Bill pay free with any
other account
3) Bill pay can draw funds
from any account at any
bank in USA
4) Make deposits to your
account by calling and
requesting ACH transfer
from your bank
X.com
Checking, CD, X.com mutual funds, Bill
Pay (soon), Person-to-person payments,
Visa card, LOC, Home Mortgages(soon),
Insurance (soon)
1)No minimum balance
required on checking, CD,
or mutual funds
2)No sales, distribution, or
redemption fees on x.com
funds
(888) 447-8999
24/7
Live Help icon
[email protected]
Source: Online Banking Report from company Web sites, 2/00
page 33
Number 57 & 58
Net-Only Banks
Personal Checking Account Analysis
Bank
American Express
Membership
Banking
Personal
Checking
Accounts
Checking
Min.
to
Open
$100
Minimum Daily Monthly
Balance to Avoid Service
Service Charge1 Charge
Rates
(APY)
1/30/00
$1,000 average
minimum or
$2,000 combined
accounts average
minimum
$7.50
na
$7.50
2.00%
Pros/Cons
Pros: free bill pay, overdraft protection to $5,000,
$1,000 limit per day at ATM, no surcharge at 4,200
Amex-owned machines
Cons: no reimbursement of other bank ATM
surcharges
Interest
Checking
$100
$2,500 average
minimum or
$5,000 combined
account average
minimum
Pros: free bill pay, overdraft protection to $5,000,
$1,000 limit per day at ATM, reimbursement of ATM
surcharges 4x per month up to $1.50 each transaction,
no surcharge at 4,200 Amex-owned machines
Bank Direct
Checking
with Interest
$100
na
$0
3.25%; 4.75%
over $10k
Pros: Free bill pay; 4 ATM surcharges (up to $1.50
each) reimbursed per month
citi f/i
Checking
$1
$1,000 (combined in
checking, savings,
MMA, CD, credit
line, investments)
$5
na
Pros: free bill pay, 4 ATM surcharges reimbursed
per month, and all ATM surcharges reimbursed if
combined acct balances are $10,000 or more; $1,000
per day ATM limits
Basic
Checking
$1
na
$3
na
Pros: free bill pay, 4 ATM surcharges reimbursed
per month, and all ATM surcharges reimbursed if
combined acct balances are $10,000 or more; $1,000
per day ATM limits
Cons: 10 free transactions per month (ATM or check)
with all subsequent transactions @$1.25 each
CompuBank
DirectBanking
eBank
Basic
Checking
$100
na
$0
na
Interest
Checking
$1,000
$1,000
$10
3.03%
Checking
$100
na
Checking
with Interest
$100
$2500
$0
na
ePremium
Checking
$100
$5,000 in checking
or savings or
$10,000 in money
market or $10,000
in IRAs
$10
$15 (waived 2.02%;
for direct 3.25% over
deposit)
$2.5k; 4.59%
over $5k
4.33% over
$1000
Pros: free bill pay, 4 ATM surcharges reimbursed per
month (up to $1.50 each)
Cons: 20 free online bill payments and 20 free ATM
transactions (additional transactions at 50 cents each;
free unlimited debit card transactions; 10 free checks
(additional at $1.00 each)
Pros: 6 ATM fees are automatically reimbursed; free
bill pay, free checks, traveler’s checks, and cashier’s
checks, reduced rates on loans, bonus rates on CDs
Cons: bill pay $5.95/mo, first 6 months free
ePlus
Checking
$100
$500
$10
PrimeTime
Checking
(50+)
$50
$1,000 or $5,000
in MMA or
$10,000 in CD or
IRA
$10
4.07% over
$500
bill pay
3.75%
bill pay, unlimited check writing, free checks, safe
deposit box discount, no-fee traveler’s checks, bonus
CD rates
eValue
Checking
$50
na
$0
na
bill pay, unlimited check writing
everbank
page 34
e/Checking
Account
$100
$1,500
$4.95
5.01% (6.01%
until 3/31/00)
Pros: no advance fees for overdraft protection
Cons: refund up to 4 ATM surcharges per month to a
total of $4.00 requires customer to mail in receipts, no
interest paid if balance is below $1,500 minimum
Number 57 & 58
Net-Only Banks
Bank
First Internet Bank
of Indiana
G&L Bank
Personal
Checking
Accounts
$100
na
Interest
Checking
$100
$2,500 or $1,000
in direct deposit
Campus
Pride
$100
na
Lifestyle
Account
Equality
Account
Platinum
Relationship
Account
nBank
page 35
$100
$100
$500
$500
na
$0
na
$3.50
3.09%
$0
2.00%
$0
none
$9.95
none
$19.95
na
Rates
(APY)
1/30/00
$49.95
2.00%
3.00%
3.50% over
$2,500
4.50% over
$5,000
Pros/Cons
Pros: will reimburse ATM surcharges up to $6.00 per
month, unlimited checking, free online bill pay,
rebate ($11.50) on first order of checks
Pros: free bill pay (first 15 transactions), free first
order of checks
Cons: charge of 50 cents for every check over 25
per/mo; $1.50 for each ATM transaction; $3.00 for
each additional group of 10 bill pays over the first 15;
no rebate of ATM surcharges from other banks
Pros: ATM fees waived for first four ATM
transactions, free bill pay (first 15 transactions) , free
first order of checks
per/mo; $1.50 for each ATM transaction after the first
4 per month; $3.00 for each additional group of 10
bill pays over the first 15; must notify the bank for a
rebate of ATM surcharges from other banks
Pros: Unlimited check writing, 3 months free Internet
access (from rainbowvoice.com), ATM fee waived
for first 10 ATM transactions, free first order of
checks, no annual fee Visa/MC
per/mo.; $1.50 for each ATM transaction after the
first 10 per month; $3.00 for each additional group of
10 bill pays over the first 30; must notify the bank for
a rebate of ATM surcharges from other banks
Pros: unlimited check writing, 6 months free Internet
access, free unlimited ATM transactions, free
unlimited order of checks, no annual fee Visa/MC,
free travelers’ checks, free bill pay
Cons: must notify the bank for a rebate of ATM
surcharges from other banks
Pros: Unlimited check writing, one year free Internet
access, free unlimited ATM transactions, free
unlimited check orders, no annual fee Platinum card,
free travelers’ checks, free bill pay
Cons: must notify the bank for a rebate of ATM
surcharges from other banks
Pros: no Millennium Bank charge for first 5 ATM
transactions at other banks
Deluxe
Checking II
$100
$500, or direct
deposit, or 55+
$5
4.07% over
$1k
Free
Checking
$100
na
$0
na
Checking
$100
na
$0
na
$2,500
$15
5.33%
Pros: overdraft protection, debit card, first order of
200 checks free, refund up to $6.00 per month of
ATM fees charged by other banks, discount on
unlimited ISP service when debited from your
checking
na
$0
3.04% over
$1000
Pros: free bill pay, reimburse 4 ATM surcharges up
to $5.00 per month; no annual fee for airline miles
Visa Classic or Platinum
Checking +
National
InterBank
Basic
Checking
Easy
Checking
Millennium Bank
Min.
to
Open
Interest
Checking
$2,500
$100
Cons: ATM transactions at other ATMs are $1.00
each after first 5; Balance inquiries and transfers at
other ATMs are $1.00 each, no surcharges
reimbursed
Pros: unlimited checking, refund up to $6.00 per
month of ATM fees charged by other banks
Number 57 & 58
Net-Only Banks
Bank
Net.B@nk
Personal
Checking
Accounts
Min.
to
Open
Rates
(APY)
1/30/00
NetValue
Checking
$50
na
$0
3.05%
SuperValue
Checking
$50
na
$4.50
4.00%
none
na
$0
NextBank
not offered
OneCore.com
not offered
PC Banker.com
American
e-Checking
SFNB
Pros: unlimited free bill pay
6.25% under
$10k; 4.00%
over $10k
Pros: unlimited online bill pay, first order of checks,
ATM surcharge rebates up to $5/mo.
Cons: limit of 15 checks per month
American
Checking
none
na
$0
1.25% over
$750
Pros: unlimited check writing, unlimited online bill
pay, overdraft protection, ATM surcharge rebates up
to $5/mo.
American
Gold
Checking
none
na
$0
1.25% over
$750
Pros: unlimited check writing, unlimited online bill
pay, overdraft protection, free personalized checks,
CD rate premiums, no fees on traveler’s checks, free
notary, preferred rates on safe deposit boxes, ATM
surcharge rebates up to $5/mo.
Checking
Account
$250
na
$0
1.76% over
$2.5k; 2.78%
over $25k
Pros: free bill pay, free first order of checks
Internet
Checking
Basic
none
na
Pros: unlimited check writing, first order checks free,
20 free bill payments per month/50 cents each over
20, 10 free ATM withdrawals per month
(50+)
Principal Bank
Pros/Cons
na
$0
Cons: no ATM surcharge reimbursements
Internet
Checking
Interest
Telebank
$100
na
$0
6.00% until
4/2000
2.5% less than
$10k
$1,000
$5
(waived for
$2k
combined
balance)
Pros: unlimited check writing, first order checks free,
35 free bill payments per month, then $0.50 each over
35, 10 free ATM withdrawals per month
True.net
checking
$1,000
3.15% over
$1k; 3.75%
over $10k;
4.45% over
$25k
Pros: unlimited bill payments, free printed checks
USA BancShares
energyONE
Checking
$1.00
na
$0
5.00%
Pros: no service charge, rebates for 5 ATM
surcharges per month each $2.00 or less
USAccessBank
Basic
Checking
$200
na
$0
na
$500
$6
4.00%
Pros: unlimited free bill pay, unlimited free check
writing, five free ATM withdrawals, (additional cash
withdrawals are $1.00 each)
Interest
Checking
$500
WingspanBank
Checking
$100
na
$0
0.50% to $1k;
3.14% over
$1k, 4.59%
over $10k
Pros: rebate of ATM surcharges up to $5.00 per
month, free bill pay, ability to use a non-Wingspan
account for bill pay
X.com
Checking
none
na
$0
1.00% to $1k;
4.00% over
$5k,; 4.50%
over $5k
Pros: 50 free checks per year, rebates for ATM
surcharges up to $6.00 per month, free overdraft
service
Cons: No indication of ATM surcharge
reimbursement
Notes: (1) Minimum daily balance, unless average daily balance noted.
page 36
Number 57 & 58
Net-Only Banks
Business Checking Account Analysis
Bank
CompuBank
DirectBanking
eBank
First Internet
Bank
G&L Bank
Millennium
Bank
nBank
OneCore.com
PCBanker.com
USAccessBank
Min. to
Open
Min Daily
Balance1
Monthly
Service
Charge
Rates
(APY)
1/30/00
Business Checking
Business services
(only in
Massachusetts)
Small business
eSweep linked to
investment account
Small business
checking
$250
$250
$10
na
none
na
$75
2.63%
$10
na
Business Checking
none
$1,000 daily
or 2,500
average
na
na
Venture Business
Account
$500
na
$10 (see
Pros/Cons)
$6.95
Capital Business
Account
$500
na
$9.95
na
Success Business
Account
$500
$10,000
$19.95
na
The Starter
$100
$2,500
$5
na
The Next Step
$100
$5,000
$10
na
The Max
$100
$7,500
$20
na
Commercial Account
Zero Balance
Account
Business NOW
Business Banking
none
none
na
analysis
$10
$10
na
na
$100
none
$500
na
$5
$20
4.07%
na
Business QuickStart
Account
none
$9.95
3.17%
Performance Account
none
$5,000, or 25
bill pays per
month, or one
other service
na
$25
various
Business Checking
none
$25
na
Business Interest
Checking (Sole
Proprietors)
Community
Checking (not-forprofit orgs)
Small Business
Checking
none
$1,000
average daily
$1000
average daily
$25
tiered
see right
none
na
na
tiered
see right
$1,000
$1,000
average daily
$6
4.00%
Account Name
na
Pros/Cons
Pros: first order of checks free
Pros: free bill pay for 6 months, no per-item fee for first
150 debits and credits per month (additional @25 cents
each)
Note: On top of monthly fee: 15 cents per check after
20, 33 cents per bill pay
Pros: first order of checks free, 10 checks and 10 bill
pays free per month, no annual fee Business Visa/MC
Cons: $3 for each set of 10 bill pays after first 10
Pros: first order of checks free, 20 checks and 20 bill
pays free per month, no annual fee Business Visa/MC
Cons: $3 for each set of 10 bill pays after first 20
Pros: unlimited check writing, free checks, unlimited
bill pays, no fee Business Visa/MC, one outgoing wire
free per month
Pros: 50 transactions (checks and deposits slips) per
month, excess at 25 cents each
month, excess at 25 cents each
month, excess at 25 cents each, online line banking no
charge over minimum balance ($7.50 below), bill pays
@ 75 cents each
Pros: compensating balances offset charges
Comments: Cash management, ISP services, online
merchant card processing, bill pay, commercial
checking
Pros: 90-day free bill pay, unlimited checks/deposits,
nationwide network of depository services, $100 million
insurance per account
Pros: 25 free bill pays per month, unlimited
checks/deposits, nationwide network of depository
services, $100 million insurance per account, selection
of money market accounts
Pros: no item fees
APY is 1.25% for $1k - $25K; 2.50% from $25k to
$50k; 4.25% over $50k
Cons: no interest when balance is under $1,000
APY is 2.00% over $10k; 3.00% over $25k; 4.25% over
$50k Pros: no per check, deposit, or per item fees
Cons: no interest when balance is under $10,000
Pros: unlimited bill pay and check writing, 5 free ATMs
(additional at $1.00)
Notes: (1) Minimum daily balance to avoid service charge,
Business checking not offered by: American Express, Bank Direct, citi f/i, everbank, National InterBank, Net.B@nk, NextBank, Principal Bank, SFNB,
Telebank, USA BancShares, WingspanBank, X.com
page 37
Number 57 & 58
Net-Only Banks
Personal Savings Products
Bank
American Express
Membership Banking
Bank Direct
citi f/i
CompuBank
DirectBanking
eBank
everbank
Indiana
Min. to
Open
Personal Savings
Min. Daily
Balance1
Mo. Service
Charge
na
Rates (APY)
as of 1/30/2000
Savings
$100
na
Money Market
$100
$5,000 in MMA or $5
$5,000 combined
(avg. min. balance)
2.00% over $500
5.65%
CDs 3 –60 months
$2,500
na
na
5.60% to 6.60%
Regular Savings
$100
$100
na
3.50%
Money Market
$500
$500
na
5.60%
CDs 6-24 mos.
$2,000
na
na
6.30% to 6.60%
Savings
$100
na
na
2.50%
Insured Money Market
$1,000
na
na
5.50%
CDs 3-60 mos.
$1,000
na
na
5.00% to 6.25%
Savings
$100
na
na
3.54%
Money Market
$2,000
$2,000
$10.00
4.05%
CDs 30 days – 2.5 years
$2,500
na
na
4.58% to 5.38%
Homebanking Money Market
$2,500
$2,500
$15.00
5.37% at $10k
CDs 6-60 months
$2,500
na
na
6.25% to 6.75%
eSavings
$100
na
na
2.66%
Christmas Club
$5.00
na
na
4.00%
eMoney Market
$1,000
$1,000
$10
5.50%
CDs 3-60 months
$500
na
na
5.75% to 6.75%
IRAs 6-60 months
na
na
na
6.00% to 6.35%
Super Saver Account
$1,500
$1,500 average
$4.95
5.50%
CDs
$1,500
na
na
ina(2)
IRAs
$1,500
na
na
ina(2)
Regular Savings
$100
$2,500
$5/quarter
3.14%
Money Market Savings
$100
$4,000
$4.95
5.38%
CDs 3-60 mo.
$1,000
na
na
4.91% to 6.86%
Easy Savings
$100
na
na
2.10%
$1,000
na
na
4.00% over $2,500
KIDZ Accounts
$25.00
na
na
4.01%
CDs 6-24 mo.
$1,000
na
na
5.65% to 6.15%
IRA 18 mo.
$500
na
na
5.50% to 5.60%
Regular Savings
$50
$200
$5.00
2.27%
Next Generation Savings (kids)
$5.00
na
na
2.27%
Money Market 2000
$1,000
$2,500
$5.00
5.26% over $2,500
CDs 30 days – 5 years
$1,000
na
na
3.66% to 6.43%
IRAs 30 days – 5 years
$1,000
na
na
3.66% to 6.43%
Basic CD
$5,000
na
na
1 yr = 6.50%
na
na
1 yr = 6.75%
IRAs
G&L Bank
Millennium Bank
nBank
Hot CD (must have checking with direct $7-100,000
deposit of payroll, Social Security, or
pension checks of $500 or more monthly
and average checking balance of $300 or
the rate may be lowered to 4.00%)
page 38
Number 57 & 58
Net-Only Banks
Bank
National InterBank
Min. to
Open
Personal Savings
Mo. Service
Charge
Rates (APY)
as of 1/30/2000
$100
$2,000
$100
$1,000
max $250k
$100,000
na
na
na
na
na
na
na
na
5.12% over $10k
4.91% to 6.43%
5.25%
6.39% to 6.75%
na
na
6.39% to 7.00%
na
na
na
Personal Money Market
$1,000
na
na
Premium Money Market
$750
na
na
CDs
$500
na
na
IRAs
$250
na
na
Principal Bank
Savings Account
Beginner’s Savings (children)
Money Market Deposit Account
CDs 3-60 months
College CD (matures on child’s 18th
birthday)
na
na
na
na
na
na
na
na
na
na
SFNB
Money Market Account
$250
$25
$2,500
$1,000
$25 (add min
of $10 any
time)
$1,000
2.00% under $100k
2.25% over $100k
2.25% over $1k
2.50% over $10k
5.25% over $25k
2.00% over $750
4.65% over $10k
4.50% to 6.40% (gold
accounts get bonus rates)
4.50% to 6.40% (gold
accounts get bonus rates)
4.06%
4.06%
4.65% to 4.85%
4.65% to 6.66%
5.05%
$1,000
$9.95
na
$1,500
$1,000
$200
na
Telebank
Basic Savings
CDs 6-24 months
Smart Saver
$5
na
$5
Net.B@nk
NextBank
OneCore.com
PC Banker
CDs 3-24 mo.
NetVantage Money Market Account
CDs 6-30 months
Min. Daily
Balance1
CDs 3-24 months
not offered
Statement Savings
waived if
multiple
accounts and
combined
balances of
$2,000
Money Market Checking
$1,000
$5
USA BancShares
CDs 3-60 months
IRAs
Savings
$1,000
$2,000
$1.00
na
na
na
na
na
na
USAccessBank
CDs 3-60 months
Savings Account
$500
$200
na
na
na
na
Money Market Account
$1,000
$1,000
$9
3.00% over $1k
3.75% over $10k
4.50% over $25k
2.60%
5.50% to 6.60%
2.55% up to $1k
5.00% over $1k
5.02% over $15k
5.07% over $50k
2.50% up to $1k
4.80% over $1k
4.85% over $15k
4.90% over $50k
6.13% to 7.16%
6.13% to 7.16%
3.00% to $1k
5.00% over $1k
6.15% to 7.25%
3.25%
4.25% under $7.5k
5.82% over $7.5k
CDs 6-60 months
$500
na
na
5.95% to 6.58%
WingspanBank
CDs 3-12 months
$2,500
na
na
5.33% to 6.01%
X.com
CDs 3-12 months
$2,500
na
na
5.40% to 6.25%
X.com mutual funds
na
na
na
various; non-FDIC product
Notes: (1) Minimum applies unless average daily balance is noted.
(2) Retrieving rates requires filling in dollar amounts and term to return rate.
page 39
Number 57 & 58
Net-Only Banks
Personal Checking Account Activity Cost
Scenario: Activity each month of 15 checks, 15 bill pays, 4 ATM withdrawals at other bank ATMs, no direct deposit
Bank
Personal
Checking
Accounts
Min.
to
Open
Min. Average
Daily Balance1
Monthly
Fees
Rates (APY)
Jan 30, 2000
Min. Daily
Balance
Min. Daily
Balance
Min. Daily
Balance
@$1,000
@$5,000
@25,000
American
Express
Membership
Banking
Checking
$100
$1,000 or $2,000
in combined
accounts
$7.50
na
$0 plus ATM
surcharges
$0 plus ATM
surcharges
$0 plus ATM
surcharges
Interest
Checking
$100
$2,500 or $5,000
in combined
accounts
$7.50
2.00%
$7.50
$0
$0
Bank Direct
Checking with
Interest
$100
na
na
3.25% 4.75%
over $10k
$0
$0
$0
citi f/i
Checking
$1
$1,000 combined
total in checking,
savings, MMA,
CD, personal line
and investments
$5
na
$0
$0
$0
Basic Checking
$1
na
$3
na
$14.25
$14.25
$14.25
Basic Checking
$100
none
none
none
$0
$0
$0
Interest
Checking
$1,000
$1,000
$10
3.03%
$0
$0
$0
Checking
$100
none
none
none
$0
$0
$0
Checking with
Interest
$100
$2,500
$15
waived
w/direct
deposit
2.02%
ePremium
Checking
$100
$5k in checking or
savings or $10k in
money market or
$10k in IRAs
$10
4.33% over
$1,000
ePlus Checking
$100
$500
$10
4.07% over $500
PrimeTime
Checking (50+)
$50
$1,000, or $5,000
in MMA or
$10,000 in CD or
IRA
$10
3.75%
eValue
Checking
$50
na
na
na
everbank
e/Checking
Account
$100
$1,500
$4.95
First Internet
Bank of Indiana
Basic Checking
$100
na
Interest
Checking
$100
$2,500 or
$1,000/mo direct
deposit
G&L Bank
Campus Pride
$100
Easy Checking
CompuBank
DirectBanking
eBank
page 40
$20 plus ATM $5 plus ATM
surcharges
3.25% over $2,500 surcharges
$5 plus ATM
surcharges
4.59% over $5k
$10 for 6
months, then
$15.95 with
bill pay
$10 for 6
months, then
$15.95 with
bill pay
$0 for 6
months, then
$5.95 with bill
pay
$0 for 6
months; then
$5.95 with
bill pay
$0 for 6
months, then
$5.95 with
bill pay
$0 for 6
months, then
$5.95 with bill
pay
6.01% until 3/31,
then 5.01%
$4.95
$0
$0
na
na
$0
$0
$0
$3.50
3.09%
$3.50
$0
$0
na
na
2.00%
$6 plus ATM
surcharges
$6 plus ATM
surcharges
$6 plus ATM
surcharges
$100
na
na
2.00%
$0
$0
$0
Lifestyle
Account
$100
na
$9.95
3.00%
$9.95
$9.95
$9.95
Equality
Account
$500
na
$19.95
3.50% over
$2,500 daily
$19.95
$19.95
$19.95
Platinum
Relationship
$500
na
$49.95
4.50% over
$5,000 daily
$49.95
$49.95
$49.95
Number 57 & 58
Net-Only Banks
Bank
Millennium
Bank
Personal
Checking
Accounts
Deluxe
Checking II
Min.
to
Open
$100
Min. Average
Daily Balance1
$500, or direct
deposit, or 55+
Monthly
Fees
$5.00
Rates (APY)
Jan 30, 2000
Min. Daily
Balance
Min. Daily
Balance
Min. Daily
Balance
@$1,000
@$5,000
@25,000
$0 plus ATM
surcharges
$0 plus ATM
surcharges
$0 plus ATM
surcharges
0.0% to $1k
4.07% to $5k
4.07% over $5k
Free Checking
$100
na
$0
na
Checking
$100
na
$0
na
$0
$0
$0
Checking +
$2,500
$2,500
$15
5.33%
$18.20
$0
$0
National
InterBank
Interest
Checking
$100
na
na
3.04% over
$1,000
$0
$0
$0
Net.B@nk
NetValue
Checking
$50
na
na
3.05%
$0 plus ATM
surcharges
$0 plus ATM
surcharges
$0 plus ATM
surcharges
SuperValue
Checking
$50
na
$4.50
4.00
$4.50 plus
ATM
surcharges
$4.50 plus
ATM
surcharges
$4.50 (plus
ATM
surcharges
nBank
NextBank
not offered
OneCore.com
not offered
PC Banker.com
American eChecking
none
na
$0
6.25% under
$10k; 4.00%
over $10k
$0
$0
$0
American
Checking
none
na
$0
1.25%
$0
$0
$0
American Gold
Checking
none
na
$0
$0
$0
$0
$0 plus ATM
surcharges
$0 plus ATM
surcharges
$0 plus ATM
surcharges
$0 plus ATM
surcharges
$0 plus ATM
surcharges
$0 plus ATM
surcharges
over $750
over
(50+)
Principal Bank
1.25%
$759
Checking
Account
$250
Internet
Checking Basic
none
na
$0
na
Internet
Checking
Interest
$100
na
$0
6.00% up to
$10k until 4/00;
2.5% over $10k
Telebank
True.net
checking
$1,000
$1,000
$5 waived
if multiple
accts. and
combined
balances of
$2,000
3.15% over
$1000, 3.75% at
$10k, and 4.45%
at $25k
$5.00 plus
ATM
surcharges
$0 plus ATM
surcharges
$0 plus ATM
surcharges
USA
Bancshares
energyONE
Checking
$1
na
$0
5.00%
$0
$0
$0
USAccessBank
Basic Checking
$200
na
$0
na
Interest
Checking
$500
$500
$6
4.00%
$0 plus ATM
surcharges
$0 plus ATM
surcharges
$0 plus ATM
surcharges
Checking
$100
na
$0
0.50% to $1k,
$0
$0
$0
$0
$0
$0
SFNB
WingspanBank
na
$0
1.76% at $2,500
2.78% at $25k
3.14% to $10k,
4.59% at $10k
X.com
Checking
none
na
$0
1.00% to $1k,
4.00% to $5k,
4.50% at $5k
page 41
Number 57 & 58
Net-Only Banks
Business Savings Products
Bank
Business Savings
Min. to
Open
Min. Daily
Balance1
Mo. Service
Charge
Rates (APY)
as of 1/30/2000
American Express
Not offered
Bank Direct
Not offered
citi f/i
Not offered
CompuBank
Business Savings
$250
na
na
3.54%
Business Money Market
$2,000
$2,000
$10.00
4.05%
DirectBanking
Not offered
eBank
Small business eSavings
$100
na
na
3.24%
Small business eMoney Market
$1,000
$1,000
$10.00
Up to $25k =4.00%
$25-50k = 4.25%
$50k+ =4.50%
everbank
Not offered
Indiana
Business Savings
$100
$2,500 average
daily balance
$5.00 per
quarter
3.14%
Business Money Market
$100
$4,000 average
daily balance
$4.95
5.38%
G&L Bank
Not offered
Millennium Bank
Small Business Savings
$200
$200
$5.00
2.27%
nBank
Commercial MMA
$5,000
$3,500
$15.00
5.33%
National InterBank
Not offered
Net.B@nk
Not offered
NextBank
Not offered
OneCore.com
Not offered
PC Banker
Not offered
Principal Bank
Not offered
SFNB
Not offered
Telebank
Not offered
USA BancShares
Not offered
USAccessBank
Not offered
WingspanBank
Not offered
X.com
Not offered
Notes: (1) Minimum daily balance is used unless an average daily balance is noted in a specific bank’s required balance description.
page 42
Number 57 & 58
Net-Only Banks
Miscellaneous Fees
Item
Account closure within 90 days
Account reconciliation
ACH transfer fee
Amortization schedule
ATM balance inquiry
ATM surcharge rebate per month
ATM transfers (at other bank ATMs)
ATM withdrawal
ATM/debit card replacement
Attachments
Audit confirmation
Bill payment
Bond coupons
Cashier’s check
Check copies
Collection items
Collection items (foreign)
Credit card annual fee
Dormant account fee
Email notifications
Equity line annual fee
Excess w/d MMA
Excess w/d savings
Fax
Fax notification
Garnishment/Levy processing
Inactivity fee
Investment account
Liens
Money orders
NSF check
Overdraft item
Overdraft protection annual fee
Overdraft transfer fee
Overnight delivery
Photocopy
Research time (hourly)
Return items
Return items (foreign)
Statement copy
Statement handling
Statements, special
Stop payment
Subpoena records (per hour)
Telephone notification
Travelers checks
Travelers checks for 2
Travelers gift checks
Uncollected funds item
Verification letter (loan or deposit)
Wire transfer (incoming)
Wire transfer (international)
Wire transfer (outgoing)
American
Express
Bank Direct
citi f/i
CompuBank
eBank
no charge
$6 max
(4 @ $1.50)
$6 max
(4 @ $1.50)
up to 4
no max $
$6 max
(4 @ $1.50)
up to 6
no max $
no charge
$3.00
no charge
no charge
no charge
no charge
no charge
$25.00
$5.95/mo, 6 mo free
$5.00
$1.00
$10.00
$60 max/year
$10 after 6
$2 after 2
$10
$50
$5 per month
$19.95 first 5,000 shares
$20
no charge
$1
$15
$7.50
$20
$22 after 5 days
$5 from savings
$2
$25
$5
no charge
$20
$20
no charge
$15
$40
$15
no charge
Notes: Fees as listed on Web site only, we did not phone for more info.
page 43
Number 57 & 58
Net-Only Banks
Miscellaneous Fees
Item
ACH transfer fee
ATM inquiry at other bank ATM
ATM withdrawal
Attachments
Audit confirmation
Bill payment
Bond coupons
Cashier’s check
Check copies
Collection items
Dormant account fee
Email notifications
Excess w/d MMA
Excess w/d savings
Fax
Fax notification
Investment account
Liens
Money orders
NSF check
Overdraft item
Overnight delivery
Photocopy
Return items
Statement copy
Statement handling
Statements, special
Stop payment
Subpoena records (per hour)
Travelers checks
Wire transfer (operator assisted)
First Internet
Bank
everbank
$25/hr.
no charge
G&L Bank
$19/hr (2 hr min)
$4 (up to 4 trans)
$6
not offered
$1.50
$5
$50
no charge
no charge
$5
$3 after 3/mo.
$15 minimum
$15 minimum
$69 (miles card)
$5/month
Millennium Bank
nBank
$20
$20
$20
$1
not offered
$1
$1 after 5
$5
$75
$3 per 10 over limit
not offered
$5
$5
$3
$15
$20
$10 per envelope
$5 customer, $15 non
$6
$4.50/mo + $0.32
ea. after five
$10 + reg fees
$3
$5
$1
$10
$1
$3 first page + $1/pg
$3
$50
$19.95 up to 2,000 shares
$75
$2
$20
$25
$30
no charge
no charge
$15
no charge
no charge
$20
$15
$30
$5
$25
$25
$20
$6
$25
$15
$19 (2 hr min)
$5
$20
$5
$2 per page
$5
$7.50
$19
$25
$5
1.50%
2%
$10
1%
2%
$2.50 each
$25
no charge
$50
$10
$15 in; $20 out
$40
$15
$15
$10
no charge
$20
$10
$15
page 44
Number 57 & 58
Net-Only Banks
Miscellaneous Fees
National
InterBank
Item
ACH transfer fee
ATM balance inquiry
ATM withdrawal
Attachments
Audit confirmation
Bill payment
Bond coupons
Cashier’s check
Check copies
Collection items
Dormant account fee
Email notifications
Excess w/d MMA
Excess w/d savings
Fax
Fax notification
Inactivity fee
Investment account
Liens
Money orders
NSF check
Overdraft item
Overnight delivery
Photocopy
Return items
Statement copy
Statement handling
Statements, special
Stop payment
Travelers checks
Net.B@nk
OneCore.com
PC Banker
Principal Bank
$10
free
no charge
$5
no charge
none
$2
no charge
$1
no charge
no charge
not offered
$5
none
$10
$9.95/mo, 90 days
free
no charge
$5
$5
no charge
$5
no charge
no charge
$5 per mo.
no charge
$10
$50
$50
$19.95/trade, first
1,000 shares
$25
$25
$25
$30
$5
$25
$5
$20
$15
$20
$15
$5
$15
$5
$25
no charge
$50
$10
$10
$10
$10
$20
$5
$20
page 45
Number 57 & 58
Net-Only Banks
Miscellaneous Fees
Item
SFNB
Telebank
USA
BancShares
USAccess
Bank
Wingspan
Bank
X.com
$10
ACH transfer fee
ATM balance inquiry
ATM surcharge rebates per month
$3 Royal
Embassy Prem.
$10 max with
max $2 each
ATM withdrawal
$5
$6
$3
$5
no charge
no charge for
email payments
$1 ea after 5/mo
$10
Attachments
$5
$50
Audit confirmation
Bill payment
50 cents each
after 20 free
no charge
no charge
Cashier’s check
$10
$10
Check copies
$5
$2
Collection items
$5
$3 minimum to
$10 max
$2 ea after 3/mo
w/ check safekp
$15
first year free
on miles card
no charge
no charge
Dormant account fee
$5
Excess withdrawals (MMA)
$2 each after 3
per month
$5
$10
$15
Excess withdrawals (savings)
$3 each after 3,
$15 each after 6
Inactivity fee
$5 after 90 days
$150/$75
$50
$1
$5
Investment account
$20
$50
$19.95, first
1000 shares
no sales
charges for its 3
funds
Money orders
$2 minimum,
$3.25 max
NSF check
$15
Overdraft item
$15
$30
$25
$25
$25
$25
$25
$5
Overnight delivery
$7.50
$25
no charge
$10
no charge
varies
Photocopy
$5
$15
$25
$20
$20
lesser of $25 or
$2 per item
Return items
$15
$30
$5
$20
$5
Statement copy
$2 per page
$2
$3
$3
$15
$20
$18
$25
Statements, special
$5
Stop payment
$15
Travelers checks
no charge
$30
no charge
no charge
no charge
$45
$25 in, $50 out
$40
$20
$25
$20
no charge
no charge
$10
no charge
page 46
Number 57 & 58
Conference Calendar
March
e-Real Estate 2000: March 21-22; Atlanta, GA; $1,495,
(800) 882-8684 or (973) 256-0211, [email protected],
www.iqpc.com
BAI’s Internet Banking Conference: March 22-24,
Miami Beach, FL; $995 for BAI members, $1,295 others,
(800) 224-9889 or (312) 683-2464, www.bai.org/internet
Third Lafferty Internet Financial Services Summit
2000: March 22-23, , Millennium Gloucester Hotel,
London, UK; $1,420, +353 1 673 5800,
[email protected],
www.lafferty.com/conferences/events.html
E-Business Strategies for the Insurance Marketplace:
March 27-29, Hilton Scottsdale Resort & Villas,
Scottsdale, AZ; $1,499, (508) 481-6400, [email protected],
www.ibcusa.com/2506
Web Site Content Management for Financial Services:
March 28 & 29, , Hyatt Regency, San Francisco, CA;
$1495, (415) 788-1234, [email protected], www.iqpc.com
Marketing on the Internet: March 29-31; Pasadena, CA;
by the AMA; $1,495; (800) 323-2320,
[email protected], www.iconferences.com
April
Electronic Bill Payment & Presentment: April 2-4; San
Francisco, CA; by American Banker; $1,095 (banks),
$1,395 (others); (800) 803-3424,
www.conferences.americanbanker.com,
[email protected]
Buying & Selling Content: April 3-4; Scottsdale, AZ; by
Online Magazine; $1,495; (800) 248-8466,
www.onlineinc.com/econtent
Credit Card Forum XII, Owning the Online Future:
April 6-7, , Fontainebleau Hilton Resort & Towers, Miami,
FL; $835, (800) 535-8403, [email protected],
www.faulknergray.com
Electronic Distribution of Mutual Funds: April 12-14;
New York City; by IBC; $1,599; (508) 481-6400;
[email protected]; www.ibcusa.com/2503
page 47
FutureBank Expo: April 19-20; St. Louis, MO; by
Thomson Financial; $395; (212) 803-8347,
www.futurebank.com
Online Mortgage Forum: April 13-14; Chicago, IL; by
IIR; $1,495; (941) 951-7885, [email protected],
www.iir-ny.com
Online Lending: Apr. 26-28; New York; by ALI
Conferences; $1,495; (312) 362-9100,
www.aliconferences.com
see enclosed flier
May
CardTech/SecureTech: May 1-4; Miami Beach, FL;
$1,195; (301) 694-5243, www.ctst.com
Networld + Interop: May 7-12; Las Vegas, NV; $1,295;
(781) 433-1516.
eFinancialWorld; May 10-12; New York City; by
eMarketWorld & Fortune; $1,295; (804) 643-8375,
www.efinancialworld.com
NetMortgage 2000: May 22-23; Atlanta, GA; by IQPC;
$1,595; (973) 256-0211, [email protected], www.iqpc.com
see enclosed flier
Financial Service Online 2000: May 22-23, Washington
D.C.; (212) 631-9764, by Faulkner & Gray; $795;
[email protected], www.faulknergray.com.
June/July
eCard: Internet Growth Strategies for Issuers and
Acquirers: June 5-6; San Francisco, CA; by Faulkner &
Gray; $795; (800) 535-8403, [email protected],
www.faulknergray.com
FutureBank Expo: June 7-8; Dallas, TX; by Thomson
Financial; $395; (212) 803-8347, www.futurebank.com
Net.Finance 2000: June 20-21; Geneva, Switzerland; by
Worldwide Business Research; 44 (171) 691-3000;
www.wbr.co.uk
Internet Retailer 2000: June 26-27; Chicago, IL; by
Faulkner & Gray; $795; (800) 535-8403,
[email protected], www.faulknergray.com
Number 57 & 58
Domain Name Protection
o thwart spoofs and look-alike competition, make
it a priority to register common variations of your
domain name, including typos (see table). For
most banks, the cost of registering the entire list of
domain names is less than $1,000 per year
(.com/.net/.org are $35 each/yr). It’s a very low-cost
insurance policy against spoofs and hacks (see OBR 36,
p. 10-12 for an example of what could happen).
T
Domain Insurance for Acme Bank
Variations
.net
.org
.countrycode
my
the
i
e
your
our
banking
Web
Net
ticker symbol
Typos
no “dot”
bnak
bak
ban
bake
If someone already registered one of these domain names,
buy it from them. Send the owner a letter or email
thanking them for registering the domain name. Then
politely explain that even though you own the
trademarked name embedded in the URL, you would be
happy to send them a finder’s fee (a couple hundred
dollars—more for big banks, less for smaller banks/CUs)
to transfer ownership to you by a certain date, with no
further negotiations. Explain, but don’t threat, that if the
seller insists on negotiating a better price, your legal
department would have to get involved and the finder’s
fee offer would be withdrawn.
acmebank.net
acmebank.org
acmebank.co.uk*
myacmebank.com
theacmebank.com
iacmebank.com
eacmebank.com
youracmebank.com
ouracmebank.com
acmebanking.com
acmebankweb.com
acmebanknet.com
ambk.com*
wwwacmebank.com
acmebnak.com
acmebak.com
acmeban.com
acmebake.com
Source: Online Banking Report, 2/00
*register your domain name in every country you operate in
**assumes publicly traded under AMBK; Net.B@nk, links its
investor relations area to its symbol <www.ntbk.com>
Internet Strategies for Financial Institutions
5025 25th Ave. Northeast, Suite 104, Seattle, Washington, USA 98105
Phone: +1 (206) 517-5021, Fax: +1 (206) 524-0351, e-mail: [email protected]
Upcoming Topics
•
ONLINE BANKING BY THE NUMBERS: Our fourth
annual look at the numbers you need for “the
plan,” including a detailed new forecast.
•
BANK OF DREAMS INSTALLMENT 2: Running
the numbers and building a business case.
•
EMAIL PAYMENTS (P2P): How to get in the
game, now.
•
SMALL BUSINESS LOAN MARKETPLACES:
Competition heats up as PrimeStreet launches
its well-financed venture.
•
ANATOMY OF A VC-BACKED STARTUP: We’ll
take a closer look at the three heavily funded
entrants: X.com/PayPal, Virtual Bank, and the
relaunched CompuBank, to see where all that
money is being spent.
page 48
Start my subscription to ONLINE BANKING REPORT:
o $695 for 1 year (12 reports) printed and electronic,
plus full-text archives back to April 1995
o $995 for 18 months (18 reports) printed and
electronic, plus full-text archives back to April 1995
Name: _________________________________________
Position: _______________________________________
Company: ______________________________________
Address: _______________________________________
Country/ Mail
City: ____________________ State: ____ Code: ____
Phone: (
) _____________ Fax: (
) _________
Email address (not required): _____________________
Number 57 & 58

Net-Only Banks - Online Banking Report

Transcription

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