BOFI v Google?

BOFI investors, as Google and Facebook launch and build banking services (SEE http://armstrongeconomics.com/2014/06/19/google-the-new-bank…), how do you see BOFI differentiating and growing its business?

That article, and a similar discussion can be found starting on post 2087. I think the general consensus here was that it’s speculative for now, but something to keep on the radar. It might be worth going through and reading the replies, though.

I think the Googles, Amazons, and Facebooks of the world could turn payment systems upside down in the future. But I’m not sure if that will turn into a complete substitution for “everything banking.” I use PayPal for a lot of online purchases, but I still keep my money in a checking account.

I will be worried when Google, Amazon, or Facebook starts a real estate lending business and staffs it with exceptional loan originators and underwriters (which very well may happen at some point). As a BOFI shareholder, I’m not particularly concerned about the consumer transaction market, which this author focuses on, as that’s not where BOFI (and most banks, really) makes its profits.

In a way, the author’s thesis supports the BOFI long position. The author states that traditional banking is old, slow, and too cost prohibitive with expensive branches that Gens X and Y don’t value or need. Because of these high costs, traditional banks won’t be able to compete in the future. I agree with all of that, which is why I’m long BOFI.

I just don’t see an Amazon payment platform for books, CDs, and music as a viable alternative for someone who needs a $5 million loan to buy a 75 unit apartment building, at least not yet. And that’s where a bank like BOFI earns its profits. Though BOFI is dependent on consumers parking money is BOFI accounts. But unless Amazon is willing to pay me 1.25% interest on my money like BOFI is, I don’t see Amazon getting my direct deposited paycheck regardless of how much I shop on its website.

I would be interested in hearing from those that disagree. What am I missing?

Fletch
Long BOFI
Long AMZN
Long GOOG

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I think the Googles, Amazons, and Facebooks of the world could turn payment systems upside down in the future. But I’m not sure if that will turn into a complete substitution for “everything banking.”

Fletch, I was thinking the same thing. I can see Facebook applying for a banking license because something that they are planning overlaps with things that are regulated under banking laws, but that’s a long way from opening up a full service bank, and I can’t see why they would even want to open a full service bank, or offer most banking services. Why not open a grocery store too, or a dry cleaners? None of them is what Facebook’s business is.

JMO

Saul

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I agree with you. FB, Amazon, Apple etc may be interested in offering a payment service but I just can’t see them interested in operating a banking service. They have little expertise in the banking sector, and I like many other shareholders would get worried if they ventured there. May be, decades from now it could happen but I don’t see it happening in the near term.

Anirban.

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