ORLANDO — Financial institutions are going toe-to-toe to win business from the best customers — and the fight is getting downright dangerous.

"It's such a knife fight to acquire customers right now," Dan O'Malley, chief executive of online banking start-up PerkStreet Financial, said on Friday.

The big banks that specialize in credit card lending are increasingly trying to poach from the limited pool of each other's wealthiest, least-risky customers — and they are spending heavily to do so. O'Malley warned that some card issuers are too focused on offering expensive rewards up front to attract customers.

"I worry that the returns on investment … might not be that great, unless you can truly get value from those customers over a long period of time, and not just get people who sign up for $500 worth of [airline] miles," O'Malley said during a panel discussion on Friday morning at the annual Card Forum and Expo.

Some card issuers "look at their models and go… 'Yeah, I'm willing to pay $250 or $500 to acquire this person," he added.

PerkStreet is vying for some of those same customers by offering a cash-back rewards debit card and online-only checking account. O'Malley on Friday said that his startup is trying to stand out by offering better products without paying the expensive overhead costs of brick-and-mortar branches.

"The way that we do it is to offer a product nobody else has," he said.

"If you think about the role that branches play today … putting bricks in the ground has got to be the single most expensive way to acquire customers you can think of," he added.

But he acknowledged that the field of online-only banking competitors is likely to get more crowded with time.

"Last time I pulled the data there were 14,738 banks [and credit unions] in the U.S. How many are online? I don't know, 20, 25, maybe 50, if you want to be generous with it?" he said. "I think we're going to see increased competition."

O'Malley spoke on a panel at Card Forum and Expo, a conference sponsored by American Banker and its publisher, SourceMedia.

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