A group of Atlanta bankers and entrepreneurs has secured financing for a new bank that would serve the local area and operate entirely on the Internet.

Organizers of the Atlanta Internet Bank have applied for regulatory approvals and aim to go on-line as a federally insured savings bank in August, right after the Olympics.

If its plans are given green lights, the Atlanta bank will likely become the third "virtual" bank in the country.

The Security First Network Bank led the way last October, becoming the first financial institution in the country to adopt the Internet as its primary distribution channel. And Huntington Bancshares of Columbus, Ohio, is planning to turn its telephone banking service, Huntington Direct, into a full-service Internet bank in April.

The Atlanta bankers say their approach to Internet banking is different from their predecessors'.

"They're going after a global market, the global users of the Internet," said Ched Hoover, chief marketing officer for the Atlanta Internet Bank.

"We think there's a strong market here in Atlanta, and we're going to target-market the customers of Atlanta who are Internet users."

The bank's president will be Don Shapleigh, who has worked for 20 years in the retail and corporate banking industry in Atlanta - first with Bank South Corp. and then with SouthTrust Bank of Georgia.

"The Atlanta market is one of the most computer-affluent markets in the country," Mr. Shapleigh said.

"We are going to take a location approach rather than a universe approach, and we feel that we can be very successful."

Mr. Shapleigh said that 400,000 Atlanta-area residents have access to the Internet. Next month, his bank will conduct focus groups to gauge these residents' preferences in on-line banking services.

The Atlanta Internet Bank plans to start by offering checking and money market accounts and bill payment services. Later it plans to offer brokerage services and credit products, Mr. Shapleigh said.

To attract customers, the bank expects to rely on heavy local advertising. "It's very difficult to market something like this nationally unless you're a monster," Mr. Shapleigh said.

The bank's lead investor is Carolina First Bank, a $1.5 billion-asset bank based in Greenville, S.C.

Mack Whittle, chief executive officer of Carolina First, said he hoped to gain access to the Atlanta market without having to build branches there.

Mr. Whittle declined to say how much his bank is investing in the Atlanta project, but he said the investment fits well with his own bank's strategy of offering forward-thinking products.

The Atlanta Internet Bank plans to sign a contract for banking software with Five Paces Software Inc., Lexington, Ky., the same firm that supplies the Security First Network Bank.

But the Atlanta Internet Bank will not be affiliated with Security First in any other way, Mr. Shapleigh said.

By contrast, the other forthcoming Internet bank, Huntington Direct, is an investor in Security First and will use its technology.

"Huntington Direct is patterned after what successful nonbanks have done, like Fidelity and Schwab," said William M. Randle, director of marketing and strategic planning for Huntington Bancshares. "Rather than complaining about the nonbanks, we just decided if it works for them, it will work for us."

The jury is still out on how high demand is running for on-line banking. Security First Network Bank will not release recent customer figures, other than to say that it had received 1,000 applications by the end of November.

Michael Karlin, president and chief operating officer of Security First Network Bank, said he welcomed the Atlanta bank to the market. His bank, he said, had a different agenda.

"We're in the business of selling this technology to big banks like Huntington and Wachovia, but there are going to be other small banks that come out and use this technology," Mr. Karlin said.

Mr. Shapleigh of the Atlanta Internet Bank said he saw the same opportunity, and hoped ultimately to replicate the local flavor of the Atlanta bank in other markets.

"This is a new venture that is plowing uncharted ground, so it's going to be an extremely interesting process," Mr. Shapleigh said. "We are looking forward to trying it out in Atlanta and, after that, taking on the world."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.