In the early 2000s, there was a huge buzz about Internet banks as a way to get customers great deals by disintermediating bricks and mortars. But the bloom fell off that rose quickly. In some ways, the death of Netbank, of Alpharetta, Ga., which was shut down by the FDIC in 2007, was a telling symbol that a Net-based model in and of itself was hardly a guarantee of success. 

Until just recently, when the banking industry was booming, the emphasis switched back to branches. Banks large and small drove up real estate values in cities across the United States, as consumer-oriented banks sought to reinvent the branch experience. The brick-and-mortar approach seemed to win out.  

But is the tide turning back to Net-only banks now? 

Quietly, a lot of banks--some call them direct banks--have embraced the Net-only approach. No less than Netscape visionary Marc Andreessen has been touting Net banks as the future of financial services. By one estimate, one in five Americans in 2008 had some sort of relationship with a Net-only bank that requires Net-based communication and transactions. The group of Net-only providers includes ING, HSBC, Citi and Capital One and others. There was talk recently that Goldman Sachs was interested in a Net-only bank. Many speculate that more community banks will increasingly tap this opportunity as the entry costs decline.   

A recent report by the Tower Group suggests that the recent financial crisis seems to have boosted the appeal of Net-only banks. People are sensitive to yields and rates and want every advantage. On top of that, they are increasingly comfortable with Net transactions. Tower predicts that consumer deposits held by direct banks as a percent of total consumer deposits will hit 8.5 percent in 2012, up from 5 percent last year. - Jim