Niche Banks
What Is a Niche Bank?
Niche banks take special care of and serve the requirements of a certain demographic segment of the population. Niche banks commonly target a specific market or type of customer and designer a bank's advertising, product mix, and operations to this target market's inclinations.
How a Niche Bank Works
Niche banks are generally types of commercial banks, which acknowledge deposits, expand loans, and offer fundamental financial products like certificates of deposit (CDs), checking, and savings accounts.
Most niche and commercial banks stand as opposed to investment banks, which specialize in bigger and more complex financial transactions. These can incorporate underwriting, being an intermediary between a securities issuer and the investing public, facilitating mergers, and other corporate rearrangements, and going about as a broker as well as financial advisor for institutional clients.
Special Considerations
In the event that you are thinking about a niche bank, it is important to set aside certain it is Federal Installment Insurance Corporation (FDIC) insured. Made in 1933, the FDIC safeguards deposits in the U.S. against bank failure. Today, the FDIC guarantees deposits of up to $250,000 per institution for all member firms.
The FDIC typically covers 100% of member checking accounts, savings accounts, certificates of deposit (CDs), and money market accounts. While the FDIC may on occasion cover parts of some trust accounts and individual retirement accounts (IRAs), they don't cover investment products, like mutual funds, annuities, life insurance policies, stocks, or bonds. Nor are items in most safe-deposit encloses included FDIC coverage by the same token.
It is likewise important to guarantee that the niche bank is a separately chartered entity and not affiliated with a bank where you as of now have deposits. This is due to the way that the FDIC generally limits deposit insurance to $100,000 per person per chartered institution.
Illustration of Niche Banks
Niche banks have moved past just versatile or web just banks, like Simple. Those banks are at this point not specific enough to be viewed as niche, as they've become more predominant.
A genuine illustration of a niche bank is the Golf Savings Bank, which backers golf competitions and offers up to $10,000 for PGA members who score a hole in one and have a specific account at the bank.
Different instances of niche banks incorporate Reid Temple AME Church Federal Credit Union, which has helpful hours before and after chapel on Sundays, alongside BowieBanc, which offered a automated teller machine (ATM) card with an image of David Bowie before it shut down.
In the mean time, Rhode Island-based Admirals Bank is a niche lender zeroed in on septic systems. Oklahoma's Bank 2 is a community bank that offers loans for manufactured homes.
Features
- Niche banks are banks that have a specific purpose, zeroed in on a specific subset of the population.
- A niche bank's whole operations, marketing, and product mix are completely developed to take care of the target market's inclinations.
- These banks are generally commercial banks and customers ought to guarantee it is Federal Deposit Insurance Corporation (FDIC) insured.
- An illustration of a niche bank incorporates Golf Savings Bank, which supporters golf competitions and offers up to $10,000 for PGA members who score a hole in one and have a specific account at the bank.
