Competition too much for NetBank

0 Comments | USA TODAY, October, 2007 | by Edward Iwata

The downfall of NetBank, a pioneer in online banking that was closed by federal regulators and filed for bankruptcy protection on Friday, reflects the demise of a dot-com firm that couldn't compete with larger financial rivals.

NetBank, based in Jacksonville and founded in 1996 at the dawn of the commercial Internet boom, was among many financial start-ups hoping to win over consumers to online banking and investing. At its height two years ago, the bank enjoyed $4.8 billion in assets and 286,000 customers.

But then NetBank ran into what it called in its bankruptcy filing "a perfect storm" of problems. Big banks, insurers, brokerage firms and credit unions charged into online financial services. The housing slump, the mortgage credit crunch and a rising number...