In one week, about 20 customers of MoneyAisle.com, a website where banks competitively bid for customers through secure, live auctions, have deposited more than US$1 million in high-yield savings and certificate of deposit accounts with small and mid-size banks, the company says.
NeoSaej, a Massachusetts developer of online auction marketplaces launched MoneyAisle.com on June 9. At that time, 65 banks had signed on to participate in the auctions, but the number of banks has now increased to 72, according to a company statement. The company did not indicate how many banks won the auctions for the US$1 million.
"I have to tell you I'm surprised that they attracted $1 million in a week," says Bob Egan, an analyst at The Tower Group, also based in Massachusetts.
Egan says the fact that it was a small number of investors putting large amounts of cash in smaller, community banks indicates that MoneyAisle has figured out a way to bridge the gap that has grown between the direct offerings of larger banks and the smaller banks.
And that, he says, is a good indicator of the success of MoneyAisle.
Large investors may have made the decision to go with a community bank because those smaller banks were offering higher yields than larger banks, such as ING or HSBC, Egan says.
"The community banks are winning because they're reaching out to consumers they wouldn't have necessarily had access to before, which is MoneyAisle's primary business proposition," Egan says.
"And because it's only a few very large depositors, it could indicate that these small community banks are going on the attack against larger institutions and to do that they're willing to offer higher yields. It's not what I expected at all."