Big lessons to learn from First Internet Bank on its 20th Anniversary
When most people were still browsing the local Blockbuster to pick out movies for the weekend, and getting excited over the “You’ve got mail” greeting from America Online; David Becker was reinventing banking at his kitchen table. He percolated on his bold ideas for a couple of years and in 1999, he publicly launched First Internet Bank (a wholly owned subsidiary of First Internet Bancorp, Nasdaq: INBK)—the first state-chartered FDIC-insured institution to operate solely via the Internet.
To say that a branchless financial institution that conducted transactions over the Internet was pioneering for the time seems inadequate. To outsiders it must have seemed like an outrageous proposition for a “tech guy” to think he could do banking better than the multibillion dollar behemoths that had actually survived the Great Depression.
And that is lesson number one. When everyone else is saying that it’s just too hard or even that it’s impossible to compete with much larger and better financed operations, you might be onto something big. “I call it a 17-year overnight success story,” says David. “It took us 17 years to get to that first billion dollars and now sitting here just three years later we’re at $3.5 billion and we’re building our new headquarters in the center of Fishers at the Nickel Plate District.”
Of course, one differentiator for David and his small launch team was that they understood the technology that the rest of the industry would take years to fully grasp. With 15 years of experience building re:Member Data Services and Virtual Financial Services — two core digital platforms used by credit unions — some of the people behind First Internet Bank (including David) built the very platforms other financial institutions were using at the time.
Doing what seemed impossible or naive to others didn’t stop with the company’s origin story. Less than a decade into the company’s journey they were faced with the recession of 2007, at the exact same time that certain regulatory measures were lifted, permitting First Internet Bank to grow larger and faster. Despite dire reports and competitors fleeing the mortgage business, First Internet Bank purchased Landmark Financial Corp and ran into the market. It would be the first of several industry head-scratching moves that have paid off for the pioneering bank.
“I remember an IBJ reporter asking me if I was crazy,” David said. “The market had imploded and consumer mortgages were drying up, but people all over the country were still buying houses. When everybody else is closing up, to me that’s the opportune time to jump in. We’ve continued to do that same thing with commercial real estate, commercial and industrial loans, and more recently with municipalities and Small Business Administration programs.”
Here is lesson number two. Any bank — a traditional one or an Internet-only one like First Internet Bank — could have targeted the same markets. What made First Internet Bank successful wasn’t its rates or its location, it was its tireless focus on the customer.
“The thing that’s been this phenomenal differentiator for us for the past 20 years is that we always do what is best for the customer,” David said. “That was the key to the focus group sitting around my kitchen table 20 years ago and it’s still our highest priority today.”
The proof is in the longevity and success of the bank. There were between 60 and 70 Internet-only startup banks that emerged nationwide during the early years that First Internet Bank was growing in Central Indiana, but only a handful remain today. While other factors certainly led to the demise of some, David is 100% confident that putting the customer at the center of every decision was and is the most important reason First Internet Bank is still thriving.
As a highly tech-enabled business with a serial tech entrepreneur at the helm, First Internet Bank is well-known in the tech community as an award-winning place to work with nearly 200 employees to date. The bank’s hiring focus, however, is not what people typically think, explained David. “They expect to see rows of programmers writing code all day long, but what they find is business analysts and problem solvers,” Daid said.
The technical team at First Internet Bank is adept a managing constant change and tying all of the different banking systems together so that customers get real-time information and access to their assets whenever, wherever, and on whichever device they’re using. One of the unique selling propositions for attracting new hires to the bank is that they are on the leading edge of developing new tools and products in a nationwide B2C industry, which isn’t as common an opportunity in a B2B heavy city like Indianapolis.
“The culture we’ve built is great and we promote from within so there is a lot of opportunity for advancement as well. But I guess what I really want people to know is that there are no sacred cows at First Internet Bank,” David said. “Not once in 20 years has anybody here said something like ‘we have to do it this way because that’s the way it’s always been done.’ Everything is on the table and we keep evolving, sometimes on a daily basis.”