Richard W. Vague, co-founder and chief executive officer of a forthcoming online bank called Juniper Financial Corp., said his deal to let customers make deposits through Mail Boxes Etc. is only the first step in his plan to establish a physical presence.
Mr. Vague, the former CEO of Bank One Corp.'s First USA credit card division, said his company is negotiating a number of agreements with automated teller machine networks and plans to announce them soon. Juniper also is developing a "robust wireless offering" and plans to sign distribution agreements with companies such as Mail Boxes Etc. that have extensive branch networks.
Juniper, based in Wilmington, Del., plans to open its virtual doors to consumers this fall. Jim Stewart, president and co-founder of Juniper, is another First USA alumnus.
"We want to solve this notion of our customers' ability to make a deposit," Mr. Vague said. "Rather than a situation where a bank like Juniper is less convenient than a conventional bank, we will end up in a situation where our bank is a great deal more convenient."
Though Juniper said it wants to make sure its customers can make deposits at a variety of locations, the bank said most customers probably would have funds wired in electronically.
"We're not trying to build in a lot of functionality to handle cash, because that's a different customer than we're trying to reach," Mr. Vague said. "We're going toward more of an upscale, electronic-payment customer. Most folks are paid by direct deposit and may occasionally receive a check from selling an investment or something."
Both Juniper and another online bank, National InterBank, announced distribution deals with Mail Boxes Etc. this week. Both institutions say the franchise is the answer to the main problem that has been plaguing online banks since their inception: how to let customers deposit funds quickly and safely.
Under both deals, banking customers will be allowed to send in their deposits by overnight mail, free of charge. With 3,400 Mail Boxes Etc. franchises nationwide, the banks are touting a new way to establish a ubiquitous presence offline.
Many industry analysts are not convinced. Though people trust nongovernment postal services such as Mail Boxes Etc. to mail letters and packages, there is skepticism about how much trust these franchises could garner as physical online banking portals.
"Right now the folks at Mail Box Etc. do a great job of handling my mail and laminating the photos of my son, but I don't know if I would let them handle my banking," said Richard Bell, director of e-banking research at TowerGroup of Needham, Mass.
Each Mail Boxes Etc. is individually-owned and managed. Training Mail Box Etc. employees to provide customer service for even basic banking transactions, such as filling out a loan or credit card application, may prove to be a real challenge, said Paul Jamieson, senior analyst for banking and payment services at Gomez Advisors in Lincoln, Mass.
"Theoretically, it is a well thought out strategy for creating a physical presence," Mr. Jamieson said, "but it is going to depend largely on how they execute it."
Mr. Vague said Mail Boxes Etc. has an extensive corporate training system that reaches all of its franchises. In nearly every Mail Boxes Etc., staff members have access to a companywide computer network that offers instructions on every service the stores offer. Every franchise will be notified about the new agreement with Juniper, and online training programs will be provided, Mr. Vague said.
Mr. Vague said he is not concerned that one of his competitors had just signed a similar agreement with Mail Boxes Etc.
"From our perspective, it's very good, because it helps establish the viability of this sort of deposit solution," he said. "It will be something that will become known to consumers and will be an effective deposit alternative."
National InterBank, which has 7,000 customers, said it thought working with Mail Boxes Etc. would be particularly attractive to small-business customers, which the Irvine, Calif.-based bank will begin courting by yearend.
The agreement marks National InterBank's first step to "build as big a network as we can" for customer access, said Ronald C. Hynes, vice president of marketing and partnerships at National InterBank. Mr. Hynes was formerly vice president of alliance marketing at First USA.
"Deposit capability is just the beginning," Mr. Hynes said. "We will look to expand customer services available through Mail Boxes Etc. in the near future."
The $75 million-asset bank will absorb the costs of mailing and tracking the deposits sent from Mail Boxes Etc. National InterBank, which went live in February, also offers free online bill payment, and other free services.
Mr. Bell of TowerGroup said he was skeptical that free tracking capabilities would be enough of an incentive.
"On my way home from the office, I pass two Mail Box Etc. locations and seven post offices," Mr. Bell said. "I don't think that there are that many people who don't feel comfortable with mailing deposits."
Ron Shevlin, director of online financial services at Forrester Research, said he agrees that the service would be attractive to small-business customers, who often set up post office boxes at facilities like Mail Box Etc. But he thinks the agreement is only a "baby step."
"The biggest complaint among customers of Internet banks is 'What if I need to get hold of them when I am offline?' not, 'I don't want to mail my deposit in,' " Mr. Shevlin said.
Jeffrey Baxter, principal at S.J. Baxter & Associates in Forest Hill, Md., said customers would feel more secure about going to an officially sanctioned place to mail in deposits than about posting them themselves.
"One of the things that a lot of online banks have learned is they need physical distribution to be able to accept deposits, which make customers feel more comfortable than mailing off a check," Mr. Baxter said.
John Kenney, director of corporate accounts at Mail Boxes Etc., said he expects more online banks to approach the company for this service. "This is a light bulb for the e-banking industry," he said.
"A number of e-commerce companies come to us and say, 'We need to use you as our brick-and-mortar place,' " Mr. Kenney said. The mailer has similar partnerships with eBay and Peoplefirst.com, an auto lender in San Diego.