Independent Banker - November 2017 - 39

risk of issuing credit to customers
known only online.
Deposits first
MemoryBank, a separately branded
online-only banking platform of
$4.9 billion-asset Republic Bank &
Trust that opened in fall 2016, expects
to begin lending money next year.
" We led with deposits because of
Republic's ongoing success in growing
loans. Deposits are always an
area of focus for the bank, " explains
Andrew Varga, chief innovation and
strategy offi cer of Republic Bank
& Trust. " Offering deposits on a
national basis is not as complex as
making loans on a national basis due
to the various state laws that come
into play. "
Republic Bank & Trust, with
MemoryBank as a division, is based
in Louisville, Ky., but already offers
mortgages online in 13 states and
Washington D.C., says Kevin Sipes,
the bank's chief fi nancial offi cer.
" Management is evaluating
originating mortgages through the
MemoryBank platform, plus home
equity lines of credit and other unsecured
lines of credit products such as
credit cards, " Sipes says. " Those are
all possibilities in the future. "
Huckabay, on the other hand, says
Redneck Bank is not planning on
becoming a lender.
" We don't have the resources to
make car loans outside the state of
Oklahoma and fi gure out how to service
that loan adequately, especially if
they stop making payments, " he says.
" So the only way to do it would be
with unsecured loans, and that puts
you in the payday loan arena, which is
something we don't want to do. "
Whether the revenue comes from
fees, interchange revenue or lending,
online banks can generally get by
with less money. There are no branch
locations to build, no landscaping to
water and fertilize, and no vaults and
safety deposit boxes to manage.
" I know it's cheaper by quite a
bit, but I can't ascertain how much
cheaper it is, " Huckabay says,
explaining that since much of the
online bank's business is still handled
by the brick-and-mortar personnel,
it's hard to separate the expenses.
That's not to say the online-only
banks have no special costs. Technology
is one, of course, and the call
center is another. Redneck Bank
had 16 people in its call center at the
height of new customer acquisition
and still has seven, Huckabay says.
Who are their customers?
People who open accounts at
online-only banks differ from brickand-mortar
accountholders in a
couple of ways. First, they are not
" BankMobile is
completely diff erent.
We wanted to go directly
to consumers and be
completely branchless,
which we think is a
better model. "
-LUVLEEN SIDHU,
BANKMOBILE
confi ned to the geographic area of the
bank, since they don't need to walk
into a branch to open an account.
" A big advantage of an online-only
bank is that you can go virtually
anywhere in the country, " Varga says.
" Your footprint immediately becomes
so much larger. "
Huckabay says Redneck Bank had
accountholders in all 50 states within
50 days of launch.
Second, they are people who are
comfortable in the online world.
" The younger generation has
grown up with technology, so
there's an expectation with them
that they can do their business [on
their] phone, " Sargent says.
independentbanker.org
SNAPSHOT:
IS THE
FUTURE OF
BANKING
VIRTUAL?
11%
Virtual banks' net gain
of customers in the year
to March 2016
47%
of consumers are willing
to bank using robo-advice
in the future
86%
of consumers will use
their branches in the
future-and want human
interaction when they do
Source: Accenture
ICBA IndependentBanker 39
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Independent Banker - November 2017

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