Bank One’s separately branded eBank WingspanBank will close, transferring customers to BankOne.com.
Bank One launched its separately branded Internet-only bank, WingspanBank.com, in 1999 at the height of Internet hype. However, after pumping nearly $150 million into Wingspan, Bank One declared that Wingspan’s flying days are over. Wingspan lacked the multi-tiered distribution and servicing customer contact points that consumers demand in banking solutions. This lack of a multi-channel distribution strategy resulted in Wingspan’s 225,000 accounts paling in comparison to Bankone.com’s 700,000 online customers. Bank One plans to convert Wingspan customers to Bank One by the end of the year.
Technologically, Internet-only banks face a major challenge in the infrastructure required to support end-to-end origination and processing of complex banking products. As a result, they tend to have a high percentage of open online checking accounts that pay inflated interest rates. Unfortunately, these checking accounts have high operational costs with little to no profit margin. As a result, Wingspan ended up with a large portfolio of unprofitable customers.
Consumers have also displayed a general lack of comfort with Internet-only banks. Culturally consumers enjoy the benefits of the branch and Internet where they are presented with a variety of channel options. This flexibility allows consumers to bank more comfortably with established players maintaining multi-channel distribution networks. These multi-channel networks enable banks to deliver the necessary service (and hand-holding) in originating complex, high-margin banking products such as mortgages, loans and investment products.
It is important for industry players to realize that channel integration will continue to be key in online and offline banking. Consumers clearly demand a combination of branches, ATMs, kiosks, phones and their computers at home from their banking organizations. Banks that successfully integrate their various distribution channels will certainly attract and retain more profitable customers than single channel Internet-only banks.
