Yes, I agree it is a concern. This is going to be a very competitive business. Every bank in the country will have to have an online presence or risk losing customers. The problem they will have competing with pure internet banks is that they must make a decision about what services and rates to offer. If they offer their customers the same low rates and high/hidden fees that they offer now, they will not be competitive with pure internet banks. If they raise their rates, slash fees and offer free bill pay then they risk cannibalizing their current client base. The same client base they have been bilking for the last few years with fees that go directly to their bottom line. They have the choice of either sacrificing clients or sacrificing their earnings and thus their valuation. Trapped, unless they can convince us to keep paying their way.
So USAB has the advantage on rates and fees, but they have the disadvantage of needing to build a brand that will attract new clients and accounts. National brands do carry weight, but there is growing sentiment that the big money center banks, and most B+M banks are not offering their customers competitive banking services. USAB and other internet banks must spread the word that the rules have changed and they provide true value to the banking client.
The real threat to internet banking will come from the online brokers like Etrade, Waterhouse and Schwab. They are all getting into the banking business. If they offer the same advantages as online banks, with FDIC insured checking and savings accounts as well as CD's then it is probably game over. Unless people can get something from banks that they cannot get from discount brokers. Good service, better rates, better products, diversification, etc.
I'd like to hear what others think about the threat from the online brokers and the convergence of financial services on the internet. What can USAB offer that they cannot, how will they compete ?
Michael
As concerns posting links to other posts, that is fine. Just try to batch them so they don't drown out other more substantive posts. Thanks. |
