NetBank, one of the first online banking startups and a survivor of the first web bubble, was closed Friday after intervention from the US Office of Thrift Supervision and the Federal Deposit Insurance Corporation (FDIC).
NetBank had been in trouble for some time with failed mortgages and serious operating deficiencies. The service, which floated at $12 a share in 1997 hit a high of $249/ share in April 1999 until settling to a price of $15 a share in mid 2004. The company was delisted from the NASDAQ on August 3 this year and last traded at $0.068 on the OTC board on Friday.
An interesting comparison can be drawn between NetBank’s model and a number of verticals being targeted by startups today. In 96 internet banking was new and the big players were only just starting to roll out internet banking services, and even then they weren’t very exciting. Services such as NetBank offered a product suite that was innovative at the time; however the major players saw a demand for online services and eventually caught up. It’s not too dissimilar today to the various Google Maps mashup services that have launched, only to find Google 6 months later offering the same features themselves. We’ve seen it a little bit with MySpace add-ons and I suspect we’ll see it with Facebook in the months to come as well.
Existing NetBank accounts have been acquired by ING Direct. NetBank joins the veiled halls of the TechCrunch Deadpool.