Banks for pet lovers, golf nuts and more
If you're a David Bowie fan, or a golf nut, or a pet lover, it might
seem like a fun idea to put your money in a bank that affiliates
itself with Bowie or golf or pets. But do your homework -- make
sure the bank has the backing to be there tomorrow when you click
onto your account.
Niche "banks" are a mixed bag, and some
of them aren't separate banks.
Pet Lovers Bank is really just a service of Foothill
Independent Bank, a Southern California brick-and-mortar facility
with online banking. Your checks will feature a picture of your
dog, cat, bird, armadillo or whatever nonhuman creature lives with
Pet Lovers Bank focuses on checking and depository
services. ATM cards, consumer loans and all other banking products
come from Foothill -- an institution that gets four (out of five)
stars in Bankrate's Safe
& Sound rating system.
"We think we're the first bank that's recognized
pets play a significant role in the family, and how a bank can address
those needs," says marketing director Dena Smart.
Pet Lovers bank helps customers save money by arranging
for discounts with partners who provide pet insurance and other
By adding Pet Lovers, Foothill has gone from a Southern
California bank to one that has attracted customers from around
the country, according to Smart.
Bowie bank leaves the stage
David Bowie fans apparently aren't as attached to Ziggy Stardust
as pet lovers are to their four-legged friends.
Not too long ago you could click on www.BowieBanc.com
and find BowieBanc, which was backed by USABancShares, an online
bank. The site offered loans, CDs, checking, savings and an ATM
card with a creepy-looking picture of Bowie. Click there now and
you'll go to USABancShares -- with no mention of BowieBanc anywhere
on the site.
Bank officials didn't return our calls, but BowieBanc
has, reportedly, been folded into USABancShares, which is being
investigated by the FDIC for alleged violations of banking regulations.
Customers who deposited money with BowieBanc don't
need to worry -- it's FDIC insured. But it will serve as a heads-up
to a lot of people that when it comes to banking, pay attention
to what's really important.
"I think of them like Nokia phones have different
color face plates. They're cosmetic changes," says James Van
Dyke of Jupiter Media Metrix, a financial services consulting firm.
"People don't choose a financial institution
for cosmetic reasons, and if they do, they're probably pretty flighty.
The person who chooses a bank because it has David Bowie's picture
on its site doesn't fit the profile for making financial decisions
for the right reasons," says Van Dyke.
That's not to say Van Dyke doesn't believe there's
a role for niche banks.
"We believe there's an opportunity for niche,
or affinity, banks, as we call them. But to succeed they have to
answer yes to these two questions. Are they targeting a unique audience,
and does the unique group have a set of common and compelling needs?"
A bank that answered "yes" to both questions is G&L
G&L marketed itself to gays and lesbians. The
bank is still functioning, but officials are exploring options,
including sale or liquidation.
Spokesman Seth Gordon says the overwhelming reason
the bank couldn't survive is the economy.
"It's been a very tough time for pure-play Internet
banks. Some of the huge, well-funded ones have tanked. We were well
capitalized, but not lavishly so. We weren't a spin off or outgrowth
that had a financial cushion."
Analysts were stunned G&L didn't make it.
"G&L Internet is very surprising to me,"
says Christine Barry of Meridien Research. "G&L had a strong
argument. When these couples go to a regular bank for a mortgage,
they're not considered a couple so their incomes aren't combined.
At G&L they're regarded as a couple, so it's easier for them
to get a mortgage."
G&L is hoping to be taken over by a larger financial
institution, but Gordon thinks prejudice against gays may be a hindrance.
"If there were another niche that had as much
promise and logic it would be picked up by a mainstream institution.
There's historic queasiness about overt gay marketing. Big banks
might look at G&L as a profitable part of their offering, but
because of an ongoing concern about being red-flagged to other groups,
wouldn't want to get involved."
Keeping its head above water is tough enough for any
niche bank, but if it's strictly an Internet bank, survival can
be even more difficult.
Todd Davenport, an analyst with SNL Securities, says
regardless of how well they do generating deposits they have a hard
time generating profitable assets.
"Banks make money by capturing the spread between
the interest they pay on deposits and the interest they make on
loans. A consumer is far more likely to put their dollars in an
Internet bank than they are to go there and get a loan. As a result,
they have to buy their interest-earning assets on the secondary
market in low yield mortgage-backed securities," says Davenport.
Banking for the greens
Golf Savings Bank, which has acquired 1,500 customers, is hoping
to avoid that problem. The bank opened in June 2000 when Lynnwood
Mortgage, based in the Northwest, was converted to a full-service
"The first year was spent just getting it organized,"
says vice president Rob Fuller. "It's a different culture going
from a run-and-gun mortgage company to a regulated savings bank."
While the bank has no plans to offer retail consumer
loans, its bread-and-butter side of the business is going strong,
"We do residential construction loans, home mortgages
and home equity lines. Revenue isn't a problem for us -- we're profitable.
We're looking to expand the deposit base and grow our customer base."
Fuller says Golf Savings Bank, which offers full banking
services at its headquarters in MountLake Terrace, Wash., and is
now also online, plans to offer a debit card in 2002.
Just as Pet Lovers Bank offers discounts on pet-related
products, Golf Savings Bank saves customers money when they're teeing
it up on courses in the Northwest. If that interests you, don't
be afraid to open an account, but make sure the bank is sound and
that it meets your banking needs.
If you want a full-service bank, don't settle for
less. It's generally easier to get a loan or a mortgage when you
have an established relationship with a bank through a checking
or savings account, a credit card or a CD.
& Sound bank, thrift, and credit union ratings can help
with researching an institution's financial stability.
-- Posted: Nov. 12, 2001