Old-Line Banks Advance In Bricks-vs.-Clicks Battle
Don't count out the dinosaurs when it comes to Internet banking.</br></br>In the mid-1990s, a host of Internet-only banks began popping up with promises to run circles around the big banks, weighed down by bricks, mortar and costly tellers.</br></br>But now the Internet banks are being swallowed up by traditional banks and other financial-services firms or left behind in the race to sign up online customers. Big banks, despite their own struggles, are attracting far more Internet accounts than are banks with no branches that offer only an online presence.</br></br>One result: Investors have punished Net.Bank, the largest of the pure Internet banks. Shares of the Atlanta online bank have dived 77% from their peak in April on the Nasdaq Stock Market. "Net.Bank has had a hard time getting the kind of brand recognition that a Citibank or Wells Fargo has," Robert Loest, a mutual-fund manager at IPS Advisory, of Knoxville, Tenn., said in a note to investors. He recently dumped his Net.Bank shares.</br></br>It is too early to predict the ultimate winners in the online-banking game, of course. But investors now are betting that the banks that will prevail won't be Net start-ups but the old-line established companies that now have entered the fray.