Like many moneymaking enterprises, financial entities such as banks and credit card issuers haven't been immune to the influence of the Internet. Many banks have offered their customers online banking services for years, but times are changing and there is a movement afoot to innovate online-only products. As the profits roll in, credit card companies are also stepping in with their own online offerings.
There are many reasons for financial companies to increase their online presence, not the least of which is that it makes good fiscal sense. Online transactions save on paper and personnel, something banks have known for years. Consumers are asking for more Internet-based banking services as well, and even financial-reform legislation has helped accelerate the move to online services. The new trend is moving toward online-only savings accounts that offer higher interest rates than regular banks, and it's not only banking institutions that are jumping on board.
Barclay's will have plenty of competition in its quest to offer online-only savings accounts. Capital One
Another big player is Discover Financial Services
Online-only banking is a lucrative concern, with little overhead for financial institutions and lots of fast profits: Barclays noted that it took only two months to collect online deposits valued at $1.3 billion when it opened an online savings bank in Germany recently. Many of these companies are also looking into mobile banking offerings, which I think will be equally profitable. If you're looking for a place to park your money, you could do worse than to consider companies that are getting in on the ground floor of what promises to be the next banking revolution.
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Fool contributor Amanda Alix owns no shares in the companies mentioned above. Motley Fool newsletter services have recommended creating a diagonal call position in Wal-Mart Stores and creating a write covered strangle position in American Express. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.