NetBank Inc. is offering free overnight United Parcel Service Inc. delivery for deposits and payments.
The QuickPost service, announced Tuesday, is offered by NetBank's Financial Technologies Inc. unit and is being marketed to other banks as well, though NetBank is the only customer using it now.
It enables retail, small-business, and mortgage customers to send deposits for free from any of United Parcel's 3,800 "UPS Store" locations nationwide.
"NetBank is really as easy to use as a community bank, in terms of getting your deposits to post quickly," said Tom Cable, Financial Technologies' president and the former chief information officer of NetBank, in an interview.
He noted that 72% of U.S. residents live within five miles of a UPS Store. United Parcel is based in Atlanta and NetBank in Alpharetta, Ga.
Because NetBank is an Internet bank, services that provide customers with easy access to their accounts are considered critical.
E-Trade Financial Corp. of New York has said using a courier company would be too expensive. But NetBank is not the first Internet bank to offer such a service. Bancorp Bank of Wilmington, Del., also lets its customers ship deposits overnight for free from UPS Stores - and, unlike NetBank, from those of United Parcel's Mail Boxes Etc. Inc. as well.
Mr. Cable said the NetBank subsidiary overcame the cost barrier by shipping deposits only at the end of the day, in a single package, rather than individually. "The aggregation model is something new, and we think there's going to be a lot of economy of scale," he said.
The company has secured an exclusive arrangement with UPS and has also filed a patent on the aggregation concept.
Financial Technologies currently receives 400 deposits a day, Mr. Cable said. The program began at UPS' West Coast stores in January and gradually moved east. It was in place at all UPS locations by March 15. Deposits are posted to NetBank accounts the day after the customer drops off the package at a UPS Store.
UPS deal broadens reach of NetBank
By PERALTE C. PAUL Cox News Service Tuesday, March 22, 2005
ATLANTA — NetBank customers now can enlist Big Brown to help them manage their green.
The Alpharetta, Ga.-based, Internet-only bank will announce today an agreement with UPS that allows the financial institution's 270,000 account holders to make next-day deposits or mortgage payments at United Parcel Service's 3,800 stores nationwide.
The move gives NetBank something of a bank branch network without having to lay a single brick. The 9-year-old online bank has cited its freedom from real estate as an advantage in containing costs, keeping fees low and reacting quickly to changes in the banking marketplace.
NetBank, which tested the "QuickPost" service for three months before rolling it out nationally, plans to market it to other financial institutions through its wholly owned Financial Technologies unit. Under that scenario, NetBank would be a third-party processor for the other banks.
NetBank executives, who filed to patent the service, say the company isn't trying to move away from its niche of branchless banking.
"It's innovative in terms that it allows us to provide another mechanism to get money into the bank," said Jerry McCoy, NetBank's chief marketing officer. The bank already allows deposits through ATMs, direct deposits and traditional mail.
Christopher W. Marinac, a banking analyst with FIG Partners in Atlanta, said the arrangement with UPS allows NetBank to instantly create limited-service branches.
"The knock on NetBank is it's only online, and you have to go through the mail, and it takes a while to post," Marinac said.
NetBank hopes the UPS deal will increase its number of small-business customers.
"One of [small-business customers'] concerns was, 'How do we turn around and get our deposits in there and not have to go through the mail float?' " McCoy said. "This puts us on a service level on par with the local community bank."
NetBank launched its fast-growing small-business segment in June 2003. Small-business account deposits totaled $56 million at the end of February, up 75 percent from the $32 million in small-business deposits the bank recorded in February 2004.
Overall, NetBank had $2.5 billion in deposits at the end of last month.
Marinac, the banking analyst, noted that such initiatives could give a much-needed boost to NetBank's sagging shares. They're down about 30 percent from a year ago, in part because the company's mortgage business suffered as the refinancing boom cooled.
NetBank shares closed at $8.46 on Monday, down 10 cents, on the Nasdaq Stock Market.
NetBank Signs First QuickPost Customer
NetBank Inc. of Alpharetta, Ga., has landed its first customer for its QuickPost overnight deposit service.
It said Tuesday that the branchless USAA Federal Savings Bank of San Antonio, a unit of United Services Automobile Association, would begin a 60- to 90-day test of the service in October.
NetBank's Financial Technologies Inc. operates QuickPost, which enables customers to submit deposits for free using United Parcel Service Inc.'s overnight courier service. NetBank introduced the service in March for its own banking customers; last month about 22% of the deposits that it received by mail -and 32% of the funds - came through QuickPost.
Tom Cable, Financial Technologies' president, said that customers can use any of the nearly 4,000 UPS Store outlets in the United States and that so far they have sent deposits from more than 3,500 of them. Nearly three-quarters of Americans live within five miles of a UPS Store, he said.
Traditional retail banks' customers can make deposits at branches, but Mr. Cable said the lack of branches makes it harder for people to access their accounts at online banks.
USAA's bank "has the same sort of challenge with getting deposits" as NetBank, he said. The QuickPost service "makes a lot of sense for a financial institution like NetBank or USAA."
Mr. Cable said customers of participating banks will eventually associate the UPS logo with financial services, just as people now understand that they can use any ATM carrying the logo of a network in which their bank is a member even though the machine may not bear their own bank's name.