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Lately I have been excerpting some of the unbelievable email I get on hot-button topics. I find that many of our readers are fanatics about issues like online banking, and they know much more than I do about these things. I have taken the liberty of batching my best ones on the topic and sending them to the copy desk to be cobbled together for your perusal. All the following text has been written by TSC readers, and the individual emails are separated by gray lines.

Hey, you are

absolutely right

in suggesting in that established (yet innovative) B&M companies in the banking sector may (will) take the day -- of course, there are many other sectors out there where established, innovative (read entrepreneurial) B&M businesses will win. I have a personal bias w/r/t car dealers. For purposes of full disclosure, I am the portfolio manager for

Capital Automotive REIT

-- yeah, we're the one's doing sale-leaseback with car dealer -- and believe me it's not as stupid as it seems (but I'm not writing to sell stock -- from a


mentality, I certainly wouldn't suggest REITs as a focus).

Anyhow, I believe that there is simply

no way

that e-commerce pure plays will disintermediate a ton of sectors once the hype wears off -- autos, retail distribution, groceries, drugs -- pick any convenience item, pick any heavy-duty financing transaction -- ever try to put together a $1 billion CMBS deal solely through the Internet?

Let me give you an example of what I know -- car dealers. These guys have been around for over 100 years. Many are third-generation family-run businesses. Dealers have been fighting recessions, consolidation, American (and subsequently Asian) manufacturers, etc. since day one. They have revised and improved their business model time after time. Being someone who talks to them every day -- let me tell you -- no one is more creative than car dealers at innovating, trying to make a buck and looking for new opportunities. Now you bring in start-ups such as



, which are merely glorified referral services, and

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, which buys


dealers, and I ask you where do these guys add value -- and why so much competition for the least profitable piece of the value chain? There are at least 10 distinct "business models" fighting for a piece of the profit from selling a new car. Most are about as unique and defensible (in terms of building a sustainable competitive advantage) as patenting the latest

General Mills

(GIS) - Get General Mills Inc. Report

cereal promotion. Enough ranting. I apologize.

Point of the matter is there are simply too many overhyped "businesses," which are simply too thin to support, on a long-term basis, both their valuation and their quote-unquote "business models."

Thanks for pointing one out in the banking sector. Combine hundreds of existing banks, anxious to maintain their businesses, tens of e-commerce vendors, which are now certainly pitching banks with cost-effective ways to implement their own e-commerce strategies, and the natural advantage banks have by maintaining a convenient physical presence and most pure e-banks will simply disappear. L/T, despite, possibly having a lower cost structure, they won't have an advantage in terms of combined cost



And of course, banks aren't the only ones.

Hate to add anything else to what I'm sure is an already overcrowded mailbox -- but after reading your latest installment in the online vs. B&M bank debate, I noticed that one of the email comments you quoted was inconsistent with my own experience with online banking. I've opened two online checking accounts, with




(both of which, incidentally, gave me $100 just to open the account). I also have an account with my local branch of

Bank One



The quote was regarding unlimited free ATM usage. Both of the online banks I've dealt with not only offered unlimited free ATM usage but actually reimbursed you for the $1.50 usually charged by whoever operates the ATM. Bank One offers free unlimited ATM usage at its branches; otherwise you are hit for about $2.50 or $3 in combined service fees.

To me, this is a major attraction of online banks, as I end up using the ATM probably at least five times a month and rarely at a Bank One branch. The major disadvantage (from a consumer perspective) happens to be the other point quoted in your article -- that you have to mail in all deposits rather than depositing them by ATM. Online banks have to get past that hurdle somehow if they want to appeal to a broad base of customers.

Again, hope this wasn't just inbox clutter. By the way, been reading


for over a year, cover to cover (figuratively speaking) -- find it incredibly interesting and useful.

Happy paying subscriber


In regards to your point about not having free ATM services through the likes of



(isn't that an annoying spelling?) I would like to share this. Until about three months ago, I had all my money in a



Bank of America

(BAC) - Get Bank of America Corporation Report

) checking account. I was earning zero interest because I was in an account that didn't impose "maintenance fees" as long as I kept $750 in my account ... a remnant from my college days when I didn't have a steady stream of income. If had changed my account type after graduating, I could have earned 0.4% or whatever they pay on checking accounts. But, it wasn't worth the trouble.

What was worth switching for, though, was NetBank. I'm getting a 3.05% APY on my checking, which is OK. The real advantage is in using the money-market fund, which yields 5.12% annually, in conjunction with my checking account and the Internet. I keep most of my funds in the money market and transfer small amounts on an as-needed basis to my checking account. It works great. And because I'm earning a superior interest rate, I don't sweat the ATM fees. It's still a better deal than a bricks-and-mortar account without the fees in my case, especially since I pay for most transactions using my check card and only use cash for piecemeal expenditures.

As far as depositing checks via the mail goes, I've not had a problem yet and find that the funds are deposited quickly. The argument that mailing checks for deposit is a hassle is a red herring. For most Americans, their largest and most steady stream of income comes from their employer, which, most likely, offers a direct-deposit option. If I have to send in a check from Grandma occasionally as a "trade-off" for some of the other benefits of an Internet bank, so be it.

I'll never bank with a brickster again.


Ben Clennon


I have to take issue with this statement this particular anonymous emailer said:

"And if you are thinking about signing up for a NetBank account, ask them about unlimited, free ATM usage," one emailer writes. "Better yet, ask them about how to make deposits of grandma's Xmas checks, or the rebate check from Microsoft (MSFT) - Get Microsoft Corporation Report. On and on -- after a while, even the convenience, lower fees and higher rates' arguments wear a little thin."

First of all, I am a NetBank customer and I absolutely love it. To make deposits of "grandma's Xmas check" all you do is drop it into a pre-postage-paid envelope


supply (three come with every statement) with a deposit slip, drop it into the mailbox, and it's usually credited within two to three days. It beats the hell out of standing in the teller line on your lunch hour, or better yet, waiting in the $#@$#@ drive-through lane on a Friday afternoon. Secondly, there are never any ATM fees charged by NetBank. The only ATM you ever pay is by the


bank's ATM. To me, the measly $1 or $1.50 you pay to get cash every other week is more than made up for by not having the $10/month "checking" fee most banks charge for the privilege of letting them keep your money. Not only that, I get free online bill pay, which saves on a ton of stamps every month. Personally, I don't think B&M banks will


"get it." They are too used to nickel-and-diming customers to death, and can't stand the idea of giving away anything for free. Yeah,






might enter this arena, but wouldn't it be easier for them to just buy NetBank than start their own bank from scratch? Not sure how sound NetBank's business model is, but as a customer, I wouldn't have it any other way, and I'll never use anything


an online bank. It's just too easy.

There, I feel better.


Here is how an online bank could


the bricks-and-mortar ones:


(STMP) - Get Inc. Report

technology and allow your customers to withdraw currency from their accounts through their "special" proprietary



color printer, over the Internet. Beats going to an ATM hands down.

Widespread adoption of encrypted smart-card technology could come close to printing currency through your home PC. Customers with good credit and assets (i.e., recourse) could be allowed to download and print smaller-denomination "smart cards," or coded vouchers that would be spent like cash by the consumer but processed like a credit-card payment or a traveler's check by the vendor.

The consumer would simply have to agree that a voucher, once printed, cannot be canceled, even if lost or stolen, and therefore, merchants could accept vouchers as if they were cash.

Summary: Just what is money, anyway, when you really think about it?

Thanks for your articles -- they make me smile, every day.

Bill White


Saw the article that


is looking to be bought or partner. Hope that doesn't change a single thing about the


that I love. Entertainment and making money!

I can't argue about the profitability of Net banks vs. old banks, but I can't swallow the old banks' line about checking account convenience. I haven't used a traditional bank since 1990, and I love it! I'm in the military and I use


for my banking, which has only one branch worldwide (in San Antonio, Texas) and 0 ATMs.

Seems like that'd be a pain, but look at the pros and cons:


Free checking account! (unlimited check writing)

Interest (2-3.5%) paid to me for an average monthly balance greater than $1000

10 (at least) free ATMs/month (no fees from USAA)

10 ATM fee rebates/month (up to $2.50/ATM transaction that XYZ Bank charged me to use XYZ ATM)

Unlimited postage paid bank deposit envelopes

No waiting in line at the bank -0 ever!

When I move (every two to three years), I never have to close/change my checking account


I can't get a cashier's check at the drop of a hat

I don't have unlimited free ATMs (from my bank's ATM machines)

I can't deposit money a split-second before I overdraw

It's not for everyone, that's true. If your average account balance varies between $50 and -$20, it'd be bad. If you insist on getting a $20 ATM every other day, it'd be bad. If you need cashier's checks a lot, it'd be bad.

It does require a few very minor behavior modifications. Direct deposit for paychecks is a practical must. Get more cash with fewer ATM stops (I usually get $100-$200 about three or four times a month). Mail in checks instead of taking them to the bank. Figure out what to do with all your free time from not standing in line at the bank or going to the ATM 15 times a month. Figure out what to do with the extra money from not being charged $8 a month for the privilege of using their checking account or that $1.50 ATM fee every time you can't find "your" ATM. Other than ordering checks, I haven't paid

any fees

in several years.

I don't know the exact financials, but USAA has been around a long time and I don't see them going under. I guess you can afford to have a great checking account service when you aren't paying for any branch offices, 20,000 bank tellers, 1,500 bank ATM machines and any other overhead.

The old banks are smokin' something if they think they won't lose a lot of customers to the Net banks, or that the Net banks can't be profitable!!!!

Oh, by the way, USAA also gave me the best rate for a car loan, the best rate for car insurance, a no-fee low-interest credit card, a very competitive money-market rate and a competitive enough home mortgage loan. All of which I chose after loving their free checking account! (so what part of the banking business is left?) (Also, Hurricane Andrew tested their car and renter's insurance policy for me. They paid up quick, with




Brian Elliott

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long AOL and Yahoo!. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at