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Another Web bank throws in the towel

G&L Internet Bank, which caters to the gay and lesbian community, is winding down its operations because of the crippled economy and its inability to draw lucrative accounts.

Greg Sandoval Former Staff writer
Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
Greg Sandoval
An Internet-only bank that caters to the gay and lesbian community is planning to close, becoming the second Web-based bank this week to announce a shutdown.

Pensacola, Fla.-based G&L Internet Bank said Tuesday that it was ceasing operations and liquidating customer deposits, a process that could take three months, as a result of the harsh economic environment and its inability to draw more lucrative customer accounts.

Chief Executive Kay Griffith said the company "made difficult decisions in order to ensure a return to investors."

The two-year-old bank's closure comes days after federal banking authorities seized the assets of Internet bank NextBank for "operating in an unsafe manner."

Choosing to operate solely online instead of opening brick-and-mortar branches, Internet-only banks have struggled to draw customers. One of the best known, Wingspan Bank, discontinued operations in June.

Studies have shown that people continue to have security concerns about Internet banks, fearing that sites are still vulnerable to electronic break-ins. In addition, many consumers say they believe Internet-only banks can't offer them as wide a range of services as brick-and-mortar banks can, such as ATM deposits and withdrawals.

Several online financial services companies, including E*Trade Financial, have struck partnerships with companies to make ATMs available. G&L does not have any ATMs, according to its Web site.

NetBank, which acquired Internet-only pioneer CompuBank last year, continues to lead the beleaguered industry.