Communications technology has spawned a revolution in banking, with one of the biggest being the growth of branchless banking, where the high cost of brick-and-mortar branches is replaced with online processing. At one time it was an exclusive club, with few significant members other than ING Direct and E*Trade Bank, but the market has been growing, and advancing technology has brought many more players to the table.
A good example is BofI Federal Bank (BofI stands for Bank of Internet). They operate out of a single location in San Diego, California, but serve personal, commercial, and industrial customers throughout the country, and now carry $2 billion in assets. Since they do not incur the higher fixed operating costs inherent in a branch-based system, they are able to compete more aggressively with traditional financial service providers. As a result, their interest rates on deposit products are generally among the highest anywhere, while rates and fees for their loan products are among the lowest.
Below are some of their key offerings:
• Income Property Lending – They offer financing options for multi-family housing on a direct and wholesale basis through their Apartment Bank division, targeting apartment buildings of 5 or more units, and mixed-use properties with less than 40% commercial use. The same division also provides commercial property lending.
• Capital Markets – Their Capital Markets division focuses on bulk loan pool acquisitions, C&I loans, structured finance, mortgage loan trading, and secondary marketing/loan sales. The goal is to help clients increase earnings potential and manage their balance sheets.
• Home Loans – They offer new home financing, home refinancing, reverse mortgage loans, and jumbo loans.
The potential of a successfully managed branchless banking model is seen in BofI’s continued growth. The company’s revenues have grown steadily since 2005, from $23 million to over $100 million, and are on course for a record 2012.
For more information, see the company website at www.BOFIFederalBank.com
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