NetBank, one of the first online banking startups and a survivor of the first web bubble, was closed Friday after intervention from the US Office of Thrift Supervision and the Federal Deposit Insurance Corporation (FDIC).
NetBank had been in trouble for some time with failed mortgages and serious operating deficiencies. The service, which floated at $12 a share in 1997 hit a high of $249/ share in April 1999 until settling to a price of $15 a share in mid 2004. The company was delisted from the NASDAQ on August 3 this year and last traded at $0.068 on the OTC board on Friday.
An interesting comparison can be drawn between NetBank’s model and a number of verticals being targeted by startups today. In 96 internet banking was new and the big players were only just starting to roll out internet banking services, and even then they weren’t very exciting. Services such as NetBank offered a product suite that was innovative at the time; however the major players saw a demand for online services and eventually caught up. It’s not too dissimilar today to the various Google Maps mashup services that have launched, only to find Google 6 months later offering the same features themselves. We’ve seen it a little bit with MySpace add-ons and I suspect we’ll see it with Facebook in the months to come as well.
Existing NetBank accounts have been acquired by ING Direct. NetBank joins the veiled halls of the TechCrunch Deadpool.
See all
Post
Hope you guys got your money out in time!
I did
Even the name sounded WEB 1.0
“Existing NetBank accounts have been acquired by ING Direct”
But I think that anyone with more than 100k (therefore uninsured by the Feds) will lose anything over the 100k limit. Not good if you were one of those. Wonder if there were any accounts at that level?
It is always sad to see a company, any company, go into the deadpool. But at the same time it is necessary. It is the natural recycling of business and people running those extinct businesses. It also provides room for new comers to try the same old idea but with new energies and approaches. Sometimes is not the idea which is not correct, but the approach and execution.
Good luck to the folks at NetBank. I hope you all landed on your feet.
Duncan, I wouldn’t compare Netbank to mashups whose business disappears when the majors make their move.
First, Netbank’s business model was innovatitve not only back in the 90s but even today. They offer(ed) a better web experience and more seamless integration with Quicken and MS Money than the “biggies”. I’ve been an early NetBank customer, and am also using Citi, and the difference is day and night. I don’t even have to use NetBank’s web site, payments, transfers, etc. are all done directly from MS Money (or Quicken). That’s from the user prospective, but of course the big part in the business model is being “brickless”.
There was nothing wrong with *that* part of the business. The problem was getting into the shaky sub-prime mortgage lending - something that has nothing to do with the Web-only aspect of this bank. Many smaller traditional outfits did the same, and some alreday have collapsed, they just did not become major news, since they were not retail banks at the same time. The mortgage crisis is hitting the US, and this is just the beginning
There are over 1500 customers who have deposits in excess of the FDIC insurance! http://netbankcustomer.blogspot.com/
Google will be next victim:
http://sufiy.blogspot.com/search?q=Google
Customers with over 100k in their Netbank accounts will not lose the excess. They’ll become Tier 1 receivers when the FDIC sells the assets that they took over from NetBank. So any regular depositors will be paid upon the sale of NetBank assets before any lawyers, accountants, and everyone else waiting in line.
On some occassions, the FDIC will insure an additional 50% of deposits over $100k.
NetBank customers will know on Sunday at 5pm EST, according to ING Direct.
I have been a long time NetBank customer. They had great service and none of the nickle and dime fees that most banks have. I actually left them last year for another bank and then returned only about 2 months later because I was not as happy with the other bank. I knew they were trying to sell out to EverBank and I heard that deal fell through, but I had no idea they were about to close down. Thanks to the FDIC for insuring my money. I had no glitches over the weekend - ATM/check card works, no bounced checks, bill payments still working, etc. It will be interesting to see how ING works out.
Wow I’m flabbergasted I this is the first I have heard of it, Netbank is my primary bank! I was also a user of CompuBank, Net bank acquired them in 2002 I think. I’m allready a ING user so hopefully I can just get my accounts combined..
to #5, to there big advantage was better integration with another pair of dinosaurs ? ie Quicken and Money ????
I topped out a 3%ish NetBank MM account when the rest of the banking world dropped to 0.40%/yr interest rates. I closed my account when NetBank dropped their interest rate to match other banks.
I looked at NetBank, but thankfully chose eTrade.
luckily I closed my account there awhile ago after discovering they violated their privacy policy and sold my email address to spammers.
Really puts a hitch in Lending Club and Prosper’s goals to supplant the banks. This is why regulation is a good thing — without the FDIC, all of NetBank’s customers would have been left in the dark.
I have been a long time Netbank user and found their web interface intuitive and easy to use. Never had a spamming problem nor did I get nickled and dimed like other banks. Sorry to see them go.
I liked Netbank although their interest rates weren’t as good as others offered. Netbank was my primary and my paycheck is direct deposited there. However I kept most of my funds at ING because of the stability and higher interest although the interest at ING isn’t as high as others. Case in point is a little bank called igoBanking. I opened an account there and they refused to link to other accounts I had elsewhere unless I agreed to their terms for the billpay service. Which I refused. So my money is earning 5.25% but I can’t access it easily.
I hope igoBanking dies a miserable death like Netbank.
R.I.P. Netbank
Don’t have any fears of ING they are a great service.
I had 118 grand in netbank and was a long time customer. Now I am trying to get my money from the bank. No wires out (even though they said you could) I talked to a FDIC rep today and they said only thing i could do is write a check to get my money out. What a bunch of crap. I wated 2 days for the wire to clear and finaly after a half hour wait I got that answer.
We with over the 100,000 got a 50% dividend on the excess but like I said I have yet to find a way to get my money other then a check…. which I don’t even have.
I was a NetBank customer since 2000 … I loved their service. I never had any issues with spammers, the website interface was easy, customer service very helpful on the rare occasions I needed to call, and best of all: There was no need for brick-n-mortar bank — I never had to go into a bank and could handle everything I possibly needed to handle online. I’ve had accounts in other banks during the same timeframe, but none were as easy as NetBank’s interface, and eventually put all my $$ into NetBank accounts. I’ve now transferred my $$ to another institution. I hope I find their service as useful. Au revoir, NetBank!
I took out my Netbank cd’s. What you do is send a Bankmail and wait 5 or more days for a reply. They put the money in my netvalue checking as I asked. Then I opened a savings account with fnbo direct, and wrote a check for 30 thousand. fnbo is giving 5.05apy and easy access to my money. I don’t like ing as there rates are low and stuff like how much money they waste on advertising and fancy buildings. I had lots of trouble opening new accounts with various banks because now it seems they pull your credit history and hold minimum credit score against you and I kept getting declined. Well Fnbo direct was the first that approved me, so here is my 30 thousand.
I hope everyone working for NetBank lost their life savings, starved, then died. The whole housing/financial sector can get fucked.