www.wingspanbank.com
WingspanBank.com, despite its poor name/URL, is by far the best
Net-only bank effort to date.
Note how the front page draws you towards the money-makers: loans and
credit cards, with a red “Apply Now” bar centered smack in the middle.
We love the closing line in the opening paragraph, which has been
carried over into its advertising campaign:
If your bank could start over, this is what it would be.
The Company: Unless you’ve been out of the country for the past
six weeks, you undoubtedly know that Wingspanbank.com (WSB) is
the grand, new Net-only effort from Bank One (Chicago, IL; $256
billion; 8.3 million ATM cards). But you’ll have to search high and low
on the WSB Web before you’ll find the name of Bank One or its credit
card company First USA. Wingspan has been launched as a totally
separate brand to minimize channel conflict with its parent and to
position the brand as hipper than that conveyed by the parent. Finally,
the separate brand makes it easier to spin-off in the future.
Not surprising, WSB is the product of its net-savvy credit card
group, First USA, which used a team of third-party vendors, along with
60+ national focus groups to nail down the strategy. WSB is structured
as a division of FCC National, an old First Chicago’s subsidiary,
founded in 1983, which has been merged into Bank One. This structure
works well since WSB can show skeptical visitors a 16-year track record
via links into the FDIC database without disclosing the Bank One
connection.
Funding: WSB’s development and marketing costs have not been
disclosed. However, Bank One told security analysts that the Internet
effort would chop $0.05 per share from earnings in the first year, or
$100 to $150 million pre tax. In year two, the bank expects to add $0.05
per share to earnings, followed in year three by $0.20 per share in
incremental earnings. Calling that an optimistic forecast would be an
understatement. Bank One is projecting $30+ million in incremental
pre-tax profits per MONTH by late 2001. That’s a lot of zeros in the
spreadsheet. If Bank One hits those targets, it will be on its way to
Web dominance.
Even if it doesn’t hit the revenue targets, if WSB is successful in
Internet terms, e.g., number of accounts, momentum, and so on, we expect
it will be spun off either as a separate company, such as
Barnesandnoble.com, or a tracking stock, such as DLJ Direct. Bank One
vehemently declines to comment on that matter, which makes even surer it
must be in the near-term plan.
Marketing: Specific marketing plans were not disclosed, other
than the budget will be “significant” and include a “variety of
channels,” including national advertising, direct cable, spot TV,
national print, national radio, and online. The bank is targeting
Internet users comfortable with ecommerce and in the 25 to 55 age
groups. Press reports following the launch mentioned a one
million-account goal in the first year, but the bank declined to confirm
that number.
A week after its launch, a $135 million pact with Lycos was
announced. We also expect WSB to ride on the coattails of the marketing
agreements its sister company, First USA, has inked with numerous Web
portals, such as AOL, MSN, and Excite (OBR 11/98); especially since
WingspanBank was developed by FirstUSA execs. The bank has earmarked a
million dollars to give $100 to the first 10,000 accounts.
Press Coverage: During the first week of its launch, 62
articles cited the new bank according to the archives at Dow Jones. Most
of the mass-media press coverage was positive, except SmartMoney.com,
which questioned its positioning as a stand-alone bank when it could
have leveraged the Bank One name. The magazine also speculated about
inevitable channel conflict as Bank One customers find out the Net bank
is offering far better pricing, especially for checking accounts. The
business press was neutral to upbeat.
Most of Wingspan’s products and technology are
outsourced.
Strategic Partners: As expected, the Internet bank has been
stitched together using technology from outside suppliers (see chart
right). The biggest surprise is that E-Loan is handling the
mortgages on a co-branded basis. It must have been a monumental internal
struggle to hand over a key part of the bank to a formidable competitor
of Bank One. Another surprise is that bill payment processing is handled
by M&I instead of Checkfree, which has had a long-time
relationship with Bank One; both sharing Columbus, Ohio headquarters
until recently.
Technology Providers
|
call center specs/training |
IBM |
|
core banking software |
Sanchez |
|
data-center & back-office support |
Sanchez |
|
net banking platform |
Edify |
|
network & servers |
IBM |
|
project management |
Sanchez |
Source: company, 7/99
Third-Party Products & Services
|
Product |
Provider |
Distribution Model |
| ATM finder |
InfoNow |
co-branded running on InfoNow
server |
| Bill pay |
M& I |
private label running on WSB server |
| Brokerage |
DLJ Direct |
private label running on Bank One
brokerage server |
| Financial calculators |
Smart
Money |
co-branded running on WSB server |
| Insurance |
InsWeb |
co-branded running on InsWeb server
with InsWeb login and username |
| Mortgages |
E-Loan |
co-branded running on E-Loan server |
Source: company, 7/99
Customer Service: Customer service, call center and email, are
handled by WingspanBank.com employees. It is not integrated with First
USA customer service.
The bank offers a robust set of financial tools, most
are co-branded with SmartMoney.com, which ironically was the lone news
outlet to question the core strategy of WSB
www.smartmoney.com
Contacts: Richard Vague is head of the First USA card unit
where the new bank was organized. At Wingspanbank.com, Jim Stewart is
CEO; Bill Wallace is EVP and CIO, Jeff Unkle is VP, Corp. Affairs,
jeffunkle@wingspanbank.com
(302) 594-8233.
“Mortgage Marketplace” is a framed version of E-Loan. However, instead
of highlighting the excellent interactive features of E-Loan, the
initial page is dominated by a list of participating lenders, a puzzling
design decision.
Analysis
Products: WSB provides a full line-up of retail banking
products. The bank or its affiliates provide: checking accounts,
short-term CDs, auto loans, overdraft lines, and credit cards. Third
parties provide a number of private or co-branded services including:
bill payment, discount brokerage, insurance (auto, home, life, health,
and renters), and mortgages (see table on the previous page).
Wingspan’s online ads feature the credit card, in this
case the ad on Onsale.com features the 3.9% APR.
We like how the bank has simplified the deposit account structure,
essentially lumping checking, savings, and a money market into one
account, an interest-bearing checking account. This appeals to the
average Net user who simply wants to pay the bills, withdraw cash, write
a few checks, and park cash in the bank. CDs are available for those
looking to lock in a rate for up to one year; while those looking for
long-term investment products can easily link to the WSB online
brokerage.
Grade: B+
Nothing new and different, but a solid product line stitched
together through third parties; additional features expected to be
added rapidly
Pricing: Pricing is aggressive. As you can see from the
chart below, no account carries a monthly or annual fee at this time.
Even overdraft protection is priced low with no transaction charges and
a five-day grace period before interest accrues. Other penalty and
transaction fees are typical, such as 2% for a credit card cash
advances, $19.95 for stock trades (up to 1,000 shares), and so on (see
chart below).
Deposit rates are generous, and nearly at parity with non-FDIC
insured money market mutual funds. The First USA credit card offered is
the 9.99% fixed rate card popularized at Yahoo! for the past year and a
half.
Wingspanbank.com Pricing
|
Option |
Mo. Fees |
Details |
| Checking |
None |
Interest paid on all balances: $0
to $999 0.50%
$1,000 to $9,999 3.10%
$10,000+ 4.50% |
| Overdraft credit |
None |
No OD advance fee plus grace period
of five days before interest begins accruing; APR = 19.99% |
| Bill Pay |
None |
Free for Wingspan checking,
savings, or CD customers, $4.95 as a standalone product;
payments can be drawn from non-WSB accounts |
| ATM card |
None |
No ATM fees (new customers receive
$5 ATM surcharge rebate for first 3 months); $500 maximum ATM
withdrawal per day; $1,500 max. POS purchases per day |
| CDs |
None |
Minimum deposit = $2,500; rates
(7/1/99): 3-month = 5.0% (APY = 5.12%)
6-month = 5.15% (5.27%)
12 month = 5.50% (5.64%) |
| Invest-ment accounts |
None |
Minimum opening deposit:
Investment Account: $2,000
Asset Management*: $10,000
Premiere Asset Management*: $50,000
Trades: $19.95 per trade up to 1000 shares and $.02 per share
thereafter; no/low load mutual funds are $35 per transaction
($20 for switching) except for certain “no transaction fee”
funds which carry no trading costs ($5,000 min) |
| Credit card |
None |
3.9% fixed introductory APR on
purchases and balance transfers for the first four to five
months, then 9.9% (19.99% on cash advances); automatic 5% rebate
for online purchases made at participating merchants |
Source: company, 6/29/99 *coming soon
Pricing Fine Print
| Monthly statement |
No charge for snail mail, checks
not returned (aka check safekeeping) |
| Minimum opening deposit |
$100 |
| Compounding |
Monthly; 365/366 |
| ATM card replacement |
$ 3.00/card |
| Account research |
$20.00/hour |
| Check copies |
$ 2.00/item after first 3 in month |
| Check printing |
Varies by style |
| Legal processing |
$20.00 max. per order, e.g.
garnishment, tax levy, etc. |
| NSF/overdraft |
$25 each except VA ($15), WV ($20),
and WI ($22) |
| Duplicate statement |
$3.00/statement |
| Stop Payment |
$18.00/item |
| Bill payment |
No fee if have a WSB checking
account, CD, installment loan, credit card or investment
account, otherwise cost is $4.95/month for first 10 payments
each month, then $0.25 per transaction. |
| Credit card fees |
Cash advance fee = 2% of the
transaction amount, with a minimum of $10 for cash advances, $5
for checks; late, overlimit, and returned check fees = $29 each;
if payment is received late twice during any 6-month period, the
APR goes to 22.99% |
| Brokerage |
Annual custody fee = $40 for
accounts without any transactions: retrieval of account
information = $30 per full or partial year requested; returned
check fee = $20 per event; extension fee = $20 per event; wire
transfers = $10 each; broker assisted trades: $0 - $3000 =
$26.25 + 1.3%; $3,001 - $6,000 = $37.50 + 0.75%; $6,001 -
$10,000 = $56.25 + 0.375%; $10,001 - $20,000 = $63.75 + 0.278%;
$20,001+ $82.50 + 0.18%; with overriding min charge of $0.03 per
share or $37.50 and maximum of $0.41 per share |
Grade: A
Current prices leave little room, if any, to be materially
underpriced. It will be interesting to see if rates stay so high
long-term.
Home Page/First Impression: The bank has posted an impressive
home page. Just 60 words of text draw users into the site. The 31-word
opening pitch is excellent, but could be improved by rewording or
eliminating the middle sentence. Here is a sentence-by-sentence
breakdown of home page copy:
Wingspan Home Page Copy
| Current Language |
Grade |
Comments |
| There is a new powerhouse in finance: You. |
A+ |
Perfect first impression. Give the copywriter a
bonus. |
| WingspanBank is here to help in ways no
traditional bank can. |
B |
OK, but could use more focus on the end-user,
e.g. “And to help you ….” |
| WingspanBank. If your bank could start over,
this is what it would be. |
A |
Perhaps a little too brash for some readers, but
we think a good, confident statement. |
A log-in button is prominently placed in the upper right-hand corner.
The navigation bar is well done and emphasizes things a user can do,
such as Pay Bills and Bank rather than the usual nebulous product names,
such as Personal Banking. In the middle of the page is an action bar
that allows users to easily link to the three key areas of About, Help,
and Apply. Even though the Apply is shown in red to contrast with the
other items, we think it is still lost on the page and should be a
button on its own. The home page also does a good job sending people to
the high-profit products: loans and credit cards.
The part of the home page we dislike is the domi-nating visual of
happy customers linked to the usual contrived financial profiles, which
themselves are OK. But the home page graphic makes it look like a
typical bank’s “take-one” brochure. Even though the home page is fast
loading, the typical user still doesn’t want to wait an extra few
seconds to download a 21k picture of newlyweds. Take a look at Yahoo,
Amazon.com, eBay, Excite, and so on: you won’t see bytes wasted on
pictures of blissful users.
Grade: B
Arguably the best bank home page on the Web, but still not up
to the standards of other leaders such as NextCard, E*Trade, and
E-Loan.
Branding: Unique brand names are usually trashed by analysts
initially, until they are embraced by consumers and become a part of the
industry vernacular. With the money Bank One is expected to pour into
the Net bank, WingspanBank will likely become a household name.
However, we think the name is a significant short-term liability,
allowing start-ups a window of opportunity to gain share while Bank One
pours bucketloads of cash into image marketing.
The name is certainly unique, memorable, looks good visually, and is
a good metaphor for a Net bank. But if you could have almost any name,
including bank.com, ebank.com, or ibank.com (or even all three), why
would you choose a tongue twister such as WingspanBank.com? It’s easy to
misspell the URL, its hard to pronounce, and hard to understand orally,
which ultimately will hurt its word-of-mouth potential. (Say it fast 10
times and you end up with “wing spank” or something equally silly.)
When pressed on the name issue, the bank says they didn’t want to be
“just be a bank, but wanted to provide the best of class in all
financial and related services.” Then, why tag “bank” on the end of the
Wingspan?
An even better choice would have been ebankone.com that would
have provided instant credibility and saved the tens or hundreds of
millions of dollars of advertising it will take to get Wingspanbank.com
on the tip of everyone’s twisted tongue.
Grade: D
Why put “spank” in your name, especially if you have a hundred
million-dollar budget?
Leveraging the Web: In our last “Anatomy of a Start-up,” we
looked at CompuBank (OBR 10/98). We liked its Web-based features
but were unimpressed with the product line. WSB is the opposite with a
superb retail banking product line-up, but little in the way of
interesting things to do with those products online. Despite its claims
to the contrary, it still acts like a traditional bank, basically having
posted an elegant brochure around account access, financial calculators,
a topnotch product application, and a great mortgage area courtesy of
E-Loan. Notable deficiencies include:
- Lack of interbank transfers: a core offering from most other
Net-only banks (see USAccessBank and First Internet Bank,
OBR 2/99).
- Lack of email services: WSB does virtually nothing with
email outside of the interactivity provided by E-Loan in the mortgage
area (see OBR 5/98; OBR 10/97). When opening a new WSB account, we
didn’t receive even a single canned email, although we got plenty of
snail mail, and even a telephone call.
WSB has established an advisory board of six users chaired by Frank
Cappiello, author and Wall Street Week panelist. The other five “iBoard”
members represent a carefully selected cross section of bank users, and
are identified only by first name. A nice touch: we’ll see what they do
with this resource.
WSB does excel in the planning department. Its Plan section includes
21 calculators, worksheets and tools, primarily Java-based applets from
SmartMoney.com. Some of the mortgage calculators are HTML-based
versions from E-Loan.
The bank bungled the implementation of the Java-based applets by
omitting the coding that tells non-Java browsers, or browsers being used
with Java disabled (as recommended by many security experts), that they
must be Java-enabled to use the
applets. Instead you get a small blank area where the calculator should
be. It’s very confusing and left us scratching our heads until we went
to SmartMoney to test the calculators and saw the error message that WSB
forgot to code (Note: At press time 8/11/99, this error remained.)
Another promising feature is called By Your Request It’s billed as an
online concierge tied to the credit card. But the WSB Web site doesn’t
explain how you use the feature, or even what it is. (You can read about
it at First USA’s Web,
www.firstusa.com
Grade: C
For $150 million we’d like a little more innovation in Web
services.
Wingspan’s navigation bar uses red to make the “Apply”
button stand out.
Sales/Application Process: From the home page on, the bank is
always selling. Small cross sell messages appear near the navigation
banner on many pages (see CD ad on loan page lower right).
The new account promotion on the home page is a good idea, but
half-baked in its execution (Note: Both new account promotions described
in this section have been discontinued at press time, 8/11/99). New
accounts get $100 automatically, regardless of account size. So a new
customer can open a checking account with just $100 to receive the $100
bonus. This strikes us as a waste of $1 million dollars (first 10,000
applicants get $100). Sure the bank wants to show that it can get 10,000
faster than any other Net bank, but the marketplace is going to discount
that claim because they are simply buying their first 10,000 accounts.
Anyone with a Web site and $1 million to throw away could attract 10,000
“accounts” in a matter of days, if not hours by offering $100 a pop.
Another unusual promotion is the $500 offered to the first 500
approved credit card applicants with a name that connotes money, such as
Bill or Penny. We’re not sure what that quarter-million dollars buys,
but we look forward to finding out.
The application process is very slick. After pressing the Apply
button, users simply check boxes to indicate which products they want,
fill out the usual mini-application, are served up two disclosures, and
press submit. The application process is entirely paperless, except for
the signature card that must be returned via snail mail to avoid income
tax withholding.
WSB has done an excellent job making the forms user friendly, and
explaining the process along the way (although not as good as
NextCard, OBR 5/98). Users are promised a remarkable 60-second
approval for “most” applications. We would have been even more impressed
if our application would have been one of those approved online, but
unfortunately, we were greeted with an error message and didn’t get to
experience the instant approval process. Here are some of the things the
bank does well in the sales process:
- positions the application one click away from most pages
of the Web site
- encourages multiple product purchases
- bundles overdraft protection with checking
- offers 60-second approval on some applications
- offered promotional incentives at launch
Grades
A- For the application process
D+ For the launch-time sales promotions
The loan area contains a good cross sales
message about “parking” funds in a CD.
WSB provides a good, concise summary of pertinent bank details in its
“About” area. However, certain items need more elaboration.
Security/Credibility: Given the public’s well-documented concerns
about online security, we find it surprising that WSB does little to address
these concerns. The only mention of security is buried in the About
section, where users will find a short boilerplate discussion of security
and browser encryption.
This oversight is probably due to WSB’s mega-bank heritage. Bank One
isn’t accustomed to having to explain to users that it runs a safe and
secure operation. It’s simply assumed as soon as the Bank One names is
invoked (Bank One is the fifth largest bank in the US). But
Wingspanbank.com, at least initially one of the smallest banks in the
country, must behave differently.
One thing the bank does well is provide an easy link to the FDIC database
record for FCC National Bank, technically its parent. A simple and powerful
way to throw the power of the federal government behind your Internet
operations. Check out the coding by following the About link from the
home page, then choose FDIC Policy in the third paragraph from the
bottom of that page.
Grade: C-
The bare-bones security discussion needs to be beefed up with
guarantees and VeriSign and/or ABA site certification seals (see OBR
4/99).
Customer Service Impressions: Overall, the Web site has a good
customer service “look and feel,” from the Help button on the front
page to the customer service inquiry template, which runs on eGain.com’s
server. We like the warning at the top of the email form warning users not
to communicate confidential information, although saying that anything in
the email could “end up in the public domain” is probably a tad too strong.
That’s not the kind of thing you want to tell users already skittish about
overall security on the Net.
Telephone service is available 7x24, but the bank forgot to disclose
hours for email service (presumably 7x24). The FAQ also mistakenly says that
telephone service is available from just 7 am to 1 pm Monday through Friday;
probably some copy left over from beta testing (Note: This error was
fixed by press time, 8/11/99.).
The lack of emphasis on email customer support is a common mistake. We
believe that most Web users would prefer to communicate routine inquiries by
email or Web form, if they were confident that they would get a
timely response and understood security implications. Since most banks don’t
provide these reassurances, users continue to clog the phone lines looking
for help. The bank needs to post email service guarantees to increase
confidence in the channel.
The FAQs are well written but could be divided up better. Also, some of
the questions deserve more detailed explanations. (Note: By press time
8/11/99, the FAQs had been expanded in some areas.) WSB also lacks a
real-time chat option for customer service in use at NextCard,
First Internet Bank, OBR 2/99) and others.
Grade: B-
Need to improve email and Web customer service options and rely
less on telephone service.
Summary: Overall, WSB is put together very well, (barely) earning
an OBR Best of the Web ’99 designation (see table on page 16 for
others). The important things are in place: they’ve made it easy to buy, the
site has a high-quality look and feel with good copy writing, and the
product line is concise and well priced from the user’s perspective.
Strategically, WSB is a stroke of genius for Bank One. As a standalone
entity, WSB would be just another Internet bank, but as a tool for Bank One
and First USA to boost market cap, we expect it to be a spectacular success.
Here’s why.
First USA has 59 million credit cards. Assuming normal industry churn,
the company opens and closes five to ten million accounts every year. Using
the five million number, if First USA diverts just 20% of its normal
production into the Wingspanbank portfolio they will have created the first
one-million-account bank from scratch (sort of).
This milestone will create an enormous amount of positive press leading
to even more accounts. This first-mover momentum and the much sought after
“scale” will wow Wall Street paving the way for a blockbuster IPO turning
WSB into a multi-billion dollar entity and siphoning capital away from other
would-be start-ups.
And initially there is little downside for First USA. At least until a
spin-off, it can still roll the one millions of WSB cards into its overall
portfolio. The main thing that could derail the plan is if other mega-banks,
especially Citibank, do the same thing.
Wingspan Winners
- all-in-one deposit account
- customer friendly pricing
- integrated OD credit line, with grace period
- excellent Web site with good navigation
- co-branded E-Loan mortgage offering
- co-branded InsWeb insurance offering
- relatively integrated brokerage offering
Source: Online Banking Report, 7/99
But if you are an existing financial institution, take heart, Bank One
has left plenty of room for you to get a leg up. For one, the name is
awkward. Be very thankful that tiny Commerce Bank of Atlanta has the
name ebank.com and not Bank One (we’ll look at ebank.com next month). Also,
WSB has yet to harness many Web capabilities such as triggered email alerts,
real-time chat, and other interactive service. Finally, by not leveraging
the Bank One brand, they must fight the expensive battle for mindshare with
every other newcomer on the Web.
A few other missing items are listed in the following table:
Wingspan Weaknesses
Overall Grades:
B+ WSB on its own merits: Will likely move up to an A as more Web
services are added.
A+ As a Bank One strategy : The only way they can lose is if other
mega-banks do the same thing, especially Citigroup.
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