Not sure if this has been discussed here. An SA article arguing that BOFI’s growth is from taking lunch from EVER, 3 times the market cap of BOFI. Thus online banking has its limits in market expansion. I ignored ‘BOFI’s overvalued and EVER’s undervalued’ part, and generally find this article unsubstantiated and weak. But this got me thinking about online banking market and I am curious what others in this board think about online banking market prospects.
Just my opinion, but when banking is looked at by function, the most important functions are deposit-taking and lending. Depositors gravitate to higher rates paid on deposits and borrowers gravitate to lower rates charged on loans. In these instances, the low cost provider of the service realizes greater growth in profit opportunity.
The very large banks like WFC, BAC, JPM, Citi utilize the internet to interface with customers when they can, but they have huge investments in brick and mortar that will keep their costs higher than BOFI for a long time. As today’s tweeters and texters mature, they will never need to find a bank branch. BOFI is tiny compared to major banks, so their runway for growth is limited only by the quality of their execution. So far, they are executing admirably.