Online Bank Moves Beyond Internet-Only

By eweek  |  Posted 2001-12-17

NetBank Inc., which was one of the first Internet banks when it launched in 1996, has been on a buying binge this year. In July, it completed the purchase of Market Street Mortgage from Republic Bancorp Inc., of Ann Arbor, Mich., which gave it 42 mortgage offices in 10 states. Last month, it announced plans to acquire wholesale mortgage company Resources Bancshares Mortgage Group Inc., in Columbia, S.C. Senior Writer Matt Hicks recently talked with CEO and Vice Chairman D.R. Grimes about how the acquisitions fit into NetBanks strategy.

eWeek: Why is an online bank like NetBank acquiring offline financial services companies?

Grimes: The argument is not and should not be about whether were all online or part brick and part clicks or whatever. The issue is, as a company, what is the most efficient way to deliver products and services to our customers? And for banking products like checking accounts, money market accounts, bill payment and those kinds of things, theres no question that the Internet, ATMs and telephones are the most efficient ways to deliver those. You dont need a branch in order to get cash to somebody.

eWeek: Does adding in traditional operations hurt your ability to keep the overhead low?

Grimes: Absolutely not. ... I think we are a ways away from the era where we can expect all mortgages, all insurance contracts or private banking or trust services delivered exclusively over the Internet. We just dont have the technology, and people dont have the comfort level yet to do that.

eWeek: Do you foresee NetBank continuing to make these types of acquisitions?

Grimes: Clearly, we are branching out ... and I would anticipate continued acquisitions in the next few years.

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