NetBank Inc. is moving full speed ahead with a plan to market its services through partners after early success with the strategy.

The Atlanta-based Internet bank has more than doubled its account rolls, to 133,000, this year, partly by making its applications a click-through option on a handful of heavily trafficked Web sites.

Now it expanding the program while bolstering its technological infrastructure to handle what it expects will be a major increase in volume. The high expectations are not unfounded: In the latter part of the third quarter, 20% of NetBank's applications came from its partners.

"I'd be very happy if one year from now 50% of our applications came to us directly and 50% from partners," Michael R. Fitzgerald, president and chief operating officer of NetBank, said in a presentation last week at American Banker's Financial Services in Cyberspace conference.

These deals will range from full-blown co-branding agreements to relationships in which NetBank's icon appears on its partner's Web site. So far, NetBank is on the Web sites of Ameritrade, the online brokerage, and Quicken, the financial planner.

Piggybacking to generate account applications is not a NetBank invention. Compubank of Houston was among the first to deploy the strategy aggressively, striking co-branding agreements with GE Financial Network; Electric.com, the Internet arm of Commonwealth Energy Corp. of Tustin, Calif.; and the financial planner H.D. Vest of Irving, Tex.

USABancshares.com is behind a handful of brand-name sites, including the Internet service provider Earthlink. Security First Network Bank and some regional banks are seeking similar arrangements.

If NetBank's experience is any indication, the affiliate path is a good one. NetBank expanded its account base by 28% in the third quarter, and at the same time reduced its acquisition costs to about $100 a customer, compared with about $180 when the bank started in 1996.

That NetBank is serious about the affiliate strategy is evident in its hiring of Laila Samawi-Utley as chief information officer. Ms. Samawi-Utley, who started at the company on Friday, came from Compubank, where she helped build a technology infrastructure that enabled Compubank to quickly add new customers who came to it through co-branding.

Ms. Samawi-Utley will be integral to an upgrading NetBank's processing platform so it can handle the much larger volume of accounts it expects as it adds partners, Mr. Fitzgerald said. "If we turn a co-branding relationship around in 45 days now, our goal is to do it in 15 days," he said.

NetBank is evaluating all of its back-end processing, including its outsourcing relationship with Bisys Inc. Mr. Fitzgerald said he expects to use a combination of outsourced and in-house systems.

NetBank is careful in choosing its partners. They must have a potential user base of at least half a million, whether they be employees, members, subscribers, or customers; the brand must be well-respected; and the company should have a clear need for an online banking service.

The last requirement is often the hardest to fill, Mr. Fitzgerald said. In Ameritrade's case, the need was clear: By offering easy access to online banking, including the ability to move money between Ameritrade and NetBank accounts, the brokerage gives its customers less reason to go to a full online financial services provider like E-Trade Group.

NetBank's discerning approach to partner selection is paying off. Ninety-five percent of people who click through NetBank's icon on Quicken's site get an account, Mr. Fitzgerald said.

Having tried print and radio advertising, NetBank now is focusing on the Internet. "Our best potential customers already are online," Mr. Fitzgerald said. "We think it's easier to get people to a site through a click versus trying to get them online."

He said NetBank also has done "revolutionary things" with e-mail marketing, though he would not go into detail except to say that it considers such a campaign a success if it gets a 3% response and that some have pulled 8%.

In all its marketing efforts, cost control - which Mr. Fitzgerald calls the bottom-line "wild card" - is just as important as signing up customers.

"I'm not going to market at the expense of profitability," he said. "I don't believe in wasting any marketing money."


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