NBA branchless accounts suggest niche banks are viable


Not too long ago, I suggested that online banks, also called direct banks, were making a comeback.

Since the FDIC shut down NetBank in 2007, the conventional wisdom was that such banks held only limited potential. Oh, how that has changed. As more people get comfortable with the idea of pure online and mobile banking, the country's four major direct banks -- Ally Bank, Discover Bank, Capital One 360 and USAA -- are starting to draw attention. They seem to be faring well.

As the idea of net-only banking catches on, will that create space for more niche online offerings?

This idea has been hanging around for the longest time. One entrepreneur recently floated the idea of online banks with super-narrow focuses, including Wag, an online bank for dog lovers. Someone once tried to launch a bank aimed at David Bowie fans called BancBowie.

But as part of a larger institution, these sorts of affinity offerings may offer more potential. One indication comes from BBVA Compass, which recently launched a branchless bank account for basketball fans in February at the NBA All-Star game.

As of now, the bank has about 10,000 NBA Banking customers, as noted by Bank Technology News. But "the vast majority of those new customers are coming into BBVA branches to open the accounts…that means most of NBA Banking's customers are relegated to the bank's current footprint in the Sunbelt states," the article notes.

However, the bank is planning to ramp up some nationwide advertising, which will hopefully generate interest far afield.

Ultimately, this foray is less about technology and more about marketing. Given the right marketing touch, niche banks may well be viable.

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Direct banks slowly making gains