Independent Banker - November 2017 - 38

group at Baker Donelson, a law fi rm
based in Memphis, Tenn.
How online-only banks work
Nearly every community bank has
some kind of online presence today.
What makes online-only banks different
is that they don't just serve
" A big advantage of an
online-only bank is that
you can go virtually
anywhere in the
country. Your footprint
immediately becomes
so much larger. "
-ANDREW VARGA,
MEMORYBANK
the parent bank's existing customers.
Rather, they attract new customers,
generally from a much wider geographic
area.
Online-only banks have different
names than the parent
brick-and-mortar bank, and they usually
offer fewer services and products.
But they are still tethered to the parent
bank via the bank's charter, with
the parent bank handling much of the
back-offi ce work.
Consider BankMobile, an onlineonly
bank launched in 2015 by
$10 billion-asset Customers Bank,
which is based in Wyomissing, Pa. It
is run by Luvleen Sidhu, daughter of
Customers Bank's CEO, Jay Sidhu.
" Customers Bank is primarily a
business bank that serves small and
medium businesses, with very little
personal banking, " Luvleen Sidhu
says. " BankMobile is completely
different. We wanted to go directly
to consumers and be completely
branchless, which we think is a
better model. "
The Sidhus set some high goals
when they began contemplating
BankMobile in 2014. They wanted
customers to be able to open an
account in less than fi ve minutes,
and they wanted the bank to succeed
without charging fees, so that frugal
consumers would be attracted to it.
In lieu of fee revenue, the Sidhus
count on interchange revenue. Every
time an account holder swipes a debit
card, the bank profi ts. Interchange
fees bring in 70 percent of BankMobile's
revenue today, Sidhu says.
Lending is another, albeit smaller,
revenue stream for BankMobile
and some other online-only brands.
BankMobile offers an unsecured line
of credit up to $5,000, and Sidhu
says the bank's " robust customer
onboarding process " reduces the
Your bank is called what?
The name Redneck Bank came to Wade Huckabay,
president of parent bank All America Bank, one day in
2007. Huckabay had hired consultants to fi nd a name
for his bank's new online-only venture but felt the four
names they off ered were too generic.
" So I sat down with a thesaurus and dictionary and
spent 14 hours plugging names into the internet to see if
they were taken, " he says. " About hour 12, Redneck Bank
came out as a possibility.
" The next day I had about 130 possible names that I
took to our offi cer meeting, and I buried Redneck Bank
in the middle. The two oldest people in the meeting liked
it best, but the younger folks thought no way, it was just
too far out there. " They decided to try out three names:
Evantage Bank, AmericaNet Bank and Redneck Bank,
which had the most success.
Redneck Bank's website plays up the concept with
38 ICBA IndependentBanker November 2017
the slogan, " Redneck Bank: Where Bankin's Funner " and
images including an outhouse and a braying horse. The
bank put up some billboards in October 2008, and in
December 5,000 people visited the site. A month later
that number was 250,000, and by March 2009 it was
1.2 million.
" We were opening 350 accounts a day, " Huckabay
remembers. " But we didn't have the software piece to
take the information from the internet into our core
system. So people were driving in from other locations
and working all night. Finally, we put 'Sold Out' across the
opening page of the website. We were just unprepared
for the power of the internet. "
Redneck Bank added the software needed to automatically
add the new accounts to the core system and
started accepting new accounts about a year later.
-Ed Avis
Independent Banker - November 2017

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