The Dog Bank, a Dot-Com Bust, Is Fetched from Obscurity

With the introduction of Wag bank, Jeff Stephens is trying to create a direct bank for pet lovers — a concept that failed 10 years ago in different hands.

Wag, the bank for dog owners, is more than a pet project: It is the first of what Stephens plans as a series of niche banks focused on affinity groups. A decade ago, as online banking was just entering the mainstream, several banks were built around the same concept, focusing on women, pet lovers and other groups.

There was even BancBowie, the online bank for David Bowie fans. By and large, these sites never made it to their golden years.

But the Internet is a different place today, dominated by social media sites like Facebook and Twitter. Building on this trend, Wag will have more of a social-networking focus than a banking focus when it launches in 2013, Stephens says.

"Lots and lots and lots of banks have tried to apply social media to build the brand of their bank … we're doing the exact opposite," says Stephens, the founder of Tribed, the Portland, Ore., company behind Wag. "We're building a brand and a community — and plugging a bank in."

Wag is still in the extreme early stage of development. The underlying bank is not yet in place, but the website is up and running for people who want to sign up for it as a dog-lovers' community. Stephens would not say which bank his company is courting to serve his site's users.

Under Tribed's model, one bank would serve as the primary institution that provides traditional banking products across multiple themed banking sites. Other banks could be invited to provide specialized banking products that might be specific to a certain niche audience. The banks would pay a fee to Tribed for the deposit and loan accounts opened through its websites.

Wag might also charge a $100 annual membership fee to users, as well as generate revenue from advertisers.

Stephens says he was not aware of the earlier attempt to build a direct bank for pet lovers, but he says his approach is different because it is built to benefit from multiple unrelated revenue sources. "I have no need, based on our business plan, to be a primary financial institution for these consumers," he says.

However, a banking relationship is a key element to keeping the Tribed banks' audiences committed, he says. Something like Intuit Inc.'s Mint, which lets users link to outside bank accounts, is a more "passive" approach to building a financial community than what Tribed is planning, he says.

So is his concept the cat's meow, or is it a dog of an idea?

When the similarly themed Petloversbank.com launched in 2001, it was a perplexing idea to James Van Dyke, president and founder of Javelin Strategy & Research.

"I'm struggling to see how people in the pet area, as a community, would have compelling financial needs that are unique," he told American Banker at the time. Though banks can and should focus on the needs of specific groups, the relationship must be built primarily on trust, he said.

Times have changed, but Van Dyke's opinion of the concept has not.

"I'd provide exactly the same response today," he said in an email this week. "Banking is first and foremost a practical activity."

Whether Tribed is successful "hinges on their ability to meet needs (rather than just interests)," he wrote. "Even social networking isn't enough."