13 Hoosier Banker March 2015 “We spent $7.5 million upfront on marketing, but now we only need to spend a fraction of that. Over the last couple of years, we’ve had growth at a compounded annual rate of 30 percent. Viral marketing has really kicked in.” What have been the misconceptions about Internet banks? “Our customers had confidence from the start, but there were some questions driven by traditional banks. In the first couple of years, our customers would try to cash First IB checks and were told that the checks weren’t real. But most of those issues have gone by the wayside. Consumers have become educated over the years to recognize that the Internet is a viable channel. “When we launched, the only drawback to customers was that if they needed coin and currency, we couldn’t provide it at that time. A customer could get cash from ATMs, or could mail us a check. But nowadays, they can snap a photo of a check and email it to us, so even the issue of getting money to us has been electronically solved.” What are the advantages to customers in banking with an Internet bank? “By far the best advantage to the customer is low-to-no fees, high interest rates on deposits and a below-market rate on the loan side. We don’t have the overhead costs that traditional banks have. “Right now our money market account pays 80 basis points, and I think the national average is 10 for banks all across the country, so our customers are getting eight times the return on their money, with no monthly service fee. “Also being able to real-time selfservice is a strength. Our customers see check images. They’ve got realtime transactions. If I go to Sam’s Club on Saturday, as I swipe my debit card, the transaction is posted to my account. “We give consumers immediate access to their funds, because everything is posted in a real-time environment. Our bank has no risk if a customer wipes out an account, because we’re not posting off of balance files. “Customers can move money seamlessly. They become their own private bankers.” What is the profile of your typical customer? “Surprisingly the average customer in the early stages was a career-established, male road warrior who was tech-savvy and who wanted the convenience of banking 24 hours a day, seven days a week, anywhere in the world. “Today most of our customers are still the road warriors ‒ living out of suitcases and not available during traditional banking hours ‒ or the self-employed. We have a lot of doctors, dentists and attorneys who run their own businesses. “Our average credit score per customer is a 770. If we’ve had any kind of Achilles heel with our customer base, it’s that we have the folks who don’t need to borrow money. They already have cars, houses, credit cards and connections. “But we get all their deposits, and most of them have children. We have picked up a phenomenal amount of accounts through their family ties.” How does First Internet Bank address cybersecurity? “We have built in multiple systems that monitor customer activity. For example if my debit card pops up at a gas pump, and I’ve never before used my debit card to make a gasoline Family photos are front and center in David Becker’s work area. Continued on page 14. David Becker and First Internet team members wore corporate-color ties to ring the opening bell on NASDAQ in 2013.“That’s about the only time I’ve worn a tie in 16 years,” says Becker.
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