Magazine article American Banker

Online Banks' Deposits Grow at Quadruple Industry Pace

Magazine article American Banker

Online Banks' Deposits Grow at Quadruple Industry Pace

Article excerpt

Byline: Harry Terris

General Electric Co. is following a well-worn path with its deal to acquire most of MetLife Inc.as deposit business.

Deposits have been easy to come by for most banks a so much so that a few institutions, hard-pressed to profitably deploy the funds, have introduced measures to discourage them. But deposit growthas been especially robust for a pack of online upstarts that are wagering their funding strategies on the branchless model.

Among the nationas largest stand-alone direct banks, deposits have increased by 70% since the first quarter of 2008 to a combined $330 billion as of Sept. 30, or roughly four times the industrywide pace. (The group considered here consists of banking companies with more than $30 billion of deposits at June 30, 2011, and fewer than 15 branches, except for Goldman Sachs Group Inc. and Morgan Stanley.)

Online banking has become a favored avenue out of the shadow system, and into the federal safety net, for several household names once classified as nonbank financial services companies. At Ally Financial Inc., American Express Co. and Discover Financial Services a all of which, like GE, turned to deposits after the financial crisis showed how unstable wholesale funding could be a deposit growth has ranged from 55% to 190% since early 2008.

Even for ING Direct, the largest and most established Internet deposit business, deposit growth of 27% since the first quarter of 2008 to $82 billion at Sept. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.