The relationship was over before it began for pointpathbank.com, an Internet-only bank that Synovus Financial Corp. intended to use to court business from newly engaged and recently married couples.
The bank, originally planned for a launch last summer, was to deliver products and advice to couples embarking on a new stage of their financial lives, as well as offerings such as tips for brides and assistance with moving.
But the plans fizzled as quickly as some marriages. Deterred by the lukewarm performance and high costs associated with pure-play Internet banks, Columbia, Ga.-based Synovus halted the project last fall, after working on it for more than a year.
The Web site that was finally launched offers only prepaid gift cards, which were meant to be one of many products sold by the bank.
"Because the business case for Internet banking still has not been proven, we thought it was much more prudent to go with a faster path to profitability, and that was stored-value cards," said Blair Carnahan, director of business development for pointpathbank NA.
Pointpath is not the only Internet financial services company to change direction in recent months as early hopes of quick account growth faded. Several, including Bank One's WingspanBank.com, VirtualBank of Palm Beach, Fla., and E-Trade Group, have decided to open physical locations to offset the unease many consumers feel about handling their finances entirely online.
Some, including Dallas' BankDirect and Wingspan, have responded to disappointing profit projections by increasing fees, testing the theory that Internet banking customers are drawn largely by low-cost services. Still others, including First Internet Bank of Indiana and Compubank, have laid off workers to meet profitability goals.
Pointpath would have had an especially tough time attracting customers, analysts say. Though other Internet banks targeting specific groups, such as gays and lesbians or employees of high-tech companies, have had success, pointpath was focused on a particularly limited - and easily distracted - market.
The affinity acquisition strategy for pointpathbank.com was "pretty deeply flawed," said Richard Bell, director of e-banking at TowerGroup, the financial technology consulting firm. As couples prepare for one of the most monumental days of their lives, he said, finances are not the first thing on their minds.
"I have a daughter who is married, and at the time that was all going on, I doubt that she gave a single thought in any fashion to the bank," he said. "Marriage is an absolutely magnificent event in people's lives, and as much as I think banking is real important, it's just not going to make the cut."
Octavio Marenzi, a managing director at Celent Communications, doubts that newlyweds would have unique financial needs that would warrant a bank designed specifically for them. "Other banks offer mortgages" that are available to newlyweds, "so it's difficult to know what pointpathbank would have done differently," he said.
The newlywed market is a fleeting one at best, Mr. Marenzi said. "The typical person will only be in that category for a very small portion of their lives," he said. "The vast majority of the marketing message is going to fall on deaf ears, because the vast majority of people are not newlyweds."
Aimee Davis, marketing and public relations director for pointpath, said she believes the original strategy could have succeeded and pointed to statistics that 156,000 couples get engaged in the United States each year. The company simply found a strategy, she said, that is more profitable "and more of a business model."
Prepaid gift cards emerged as a "hot topic" during focus groups held in preparation of the bank's launch, Ms. Davis said. The cards function like prepaid phone cards: A fixed amount is paid, and the cards can then be used to make purchases.
"That was really our 'aha!' " Ms. Davis said. "It's like we backed into it - we found success on the way to building this bank."
Consumers can purchase the cards through the Web site of pointpathbank NA, which is now being cast as an online bank dedicated solely to prepaid cards. The bank's marketing effort, however, will primarily be aimed at businesses, which can issue private-label cards or brand them with a major credit card for use anywhere that card is accepted.
Synovus plans to keep pointpath in the family. Total System Service Inc., a payment systems company owned 80.8% by Synovus, is producing and processing the stored-value cards. One of Total System's subsidiaries, TSYS Total Solutions, Inc., is taking care of customer service, and an in-house Web development shop is helping clients set up sites to market the cards.
Pointpath began issuing the cards last October, and last week it received approval from the Office of the Comptroller of the Currency to focus exclusively on stored-value cards. Its clients include an insurance company that is offering the cards to employees to cover relocation costs, a major food company that is using the cards for a promotion, and an Internet start-up that is marketing a reloadable Visa-branded card for teens.
During the holiday season, pointpath and Visa teamed up for a promotion around "How The Grinch Stole Christmas," the Jim Carrey movie based on the Dr. Seuss book. Cards - featuring the Grinch's hand holding a gift box - worth $20 and $100, and two worth $25,000, were dropped into random boxes of Kellogg's cereal.
The company plans a much broader marketing push. Mr. Carnahan said the cards have a wide range of applications, from fast-food chains or retailers offering them as employee incentives to insurance companies using them instead of checks for settlement payments.
"Flexibility is the key - allowing you to spend the money where you like to spend the money," he said.
But Mr. Marenzi said pointpath would stand a better chance if it marketed the cards for more restrictive uses, for example, purchases at a particular store. Doing so would provide greater personalization and convey the sense that the giver has put some thought into the gift, he said.
Offering cards that function like cash is "utterly pointless," he said.
"You could send someone a check very easily - put a big red bow around it and send it off to them," he said. "Really what they're doing is simply opening up a checking account for someone and giving them a debit card that's attached to it, and runs out when you use the balance."
