With its launch of a separate Internet bank, Bank One Corp. is daring to start over.
Organized under its First USA credit card subsidiary, the branchless bank, to be launched officially today, will take Bank One beyond its midwestern footprint to target a national audience of Internet users.
Already perhaps the most aggressive bank in terms of on-line advertising and promotion, Bank One will project a new brand name-WingspanBank.com-that will clearly distinguish the Internet entity from an existing Web banking service and from First USA's on-line credit card activities.
The "clean slate" approach represents a bold bid to gain the banking loyalty of the growing number of Internet users, said Jim Stewart, the president and chief executive officer of Wingspan and formerly executive vice president of Wilmington, Del.-based First USA.
A major portion of Wingspan's budget will go toward marketing, officials said. Wingspan today begins a multimillion-dollar nationwide ad campaign on cable television, in print media, and on the Internet. Its main message: "If your bank could start over, this is what it would be."
Heavy advertising is considered crucial to the success of newly branded on-line ventures. PricewaterhouseCoopers has estimated that top Internet companies such as Yahoo, Amazon.com, and E-Trade Group spend 45% to 60% of their operating expenses on promoting their brands.
Bank One is pursuing a multi brand strategy-considered novel among U.S. financial companies-by retaining the Bank One and First USA names while also developing Wingspan, a moniker chosen to denote a broad range of services.
"Bank One will be in position to attract all types of customers," said Richard W. Vague, chairman of First USA and of the new bank.
He said the three-pronged push for customers who are either Internet- savvy, in need of face-to-face service, or credit card-oriented, is equivalent to a consumer product company's use of multiple brands to appeal to several demographic or lifestyle markets.
Other financial institutions are headed in the same direction.
In aiming for a "universal" customer base of one billion, said Citigroup corporate executive vice president Edward D. Horowitz, "we have to remake ourselves."
He said at a recent meeting of the New York New Media Association that "it's not about black and white," which leads in the direction of "a multiple-brand approach."
Some experts view Bank One's new-branding decision as risky.
"Dot-com companies are challenged with how to gain credibility," said Tammy Edmiston, account director at the McCann-Erickson ad agency in Seattle. "One of the ways they do it is through their existing physical presence."
But extending an existing brand to the Internet also runs a risk of alienating current customers who may fear big changes, said John Grace, executive director of Interbrand Group, a New York-based brand consulting firm. Or younger prospective customers might get the message that the institution is not changing fast enough.
Alternatively, the cost of building a new brand is enormous, Mr. Grace said. "Customers are going to ask, 'Why should I turn my assets over to something I never heard of?'"
Compounding Bank One's challenge is the fact that hundreds of Internet banking options are already available. Mr. Grace said, "Bank One has to prove why it's different."
Wingspan customers will not have access to services at Bank One branches, but they will be able to use Bank One's 7,000 automated teller machines free of charge. Wingspan also plans to reimburse any fees customers incur at other banks' ATMs.
Wingspan officials did not reveal prices but said the "general philosophy" is low interest rates on loans and high rates on deposits.
Electronic bill payment and presentment will be available to anyone who comes to the site, even if they do not have a Wingspan account. Noncustomers would pay for the service, however.
Wingspan's checking account, credit card, and home equity loan products will be "manufactured" by Bank One and First USA. Mortgage, insurance, and mutual fund products will be available from a number of providers.
"This is a step in the direction of becoming a trusted adviser to the consumer," Mr. Vague said.
Another move toward that end, he said, is a concierge service that will book travel tickets or restaurant reservations on behalf of customers. Mr. Stewart described a scenario in which a customer traveling to Italy could inquire about the best restaurants in Tuscany and make reservations through Wingspan.
About 100 people have been hired to run Wingspan, which has been available on a limited basis to First USA cardholders "for some time," Mr. Vague said. "The Internet makes it possible to do this in a way that is cost-effective."
Some observers were cool to the concierge idea. "It's so far removed from financial services," and "a bit absurd," said Octavio Marenzi, research director at Meridien Research.
"It's nonsense," said Diogo Teixeira, president of Tower Group. "Why go into direct competition with travel agencies on the Web?"
Against other institutions going the new-bank route, Wingspan may have a promotional head start.
Sovereign Bancorp, North Fork Bancorp, and Synovus Financial Corp. have Internet-only banking subsidiaries that are still in the formative stages. Security First Network Bank, the U.S. Internet pioneer now owned by Royal Bank of Canada, has not announced plans for any major advertising campaigns.
Only USABanc.com-known as USABancshares until May 21, when it became the first bank holding company to get an official "dot-com" name-is close to mounting a national advertising campaign. It started airing radio commercials June 14 in eight cities during the "Howard Stern Show" and will add cable TV spots Monday and billboard and print ads in the next two weeks.
"It's hard to say how many Internet-only banks the market will be able to support," Mr. Marenzi said.
Bank One and First USA are well established on the Internet. Both work with major Internet portal companies to reach out to new customers. The plan is to transfer to Wingspan their banner ads and other promotional agreements, Mr. Vague said.
Net.Bank of Atlanta has launched a regional advertising campaign created by USWeb/CKS, a leading Internet advertising and communications agency.
Focusing on the depth of services available at www.netbank.com and Net.Bank's higher interest rates and lower fees relative to traditional banking institutions, the campaign uses the tag line "So, why aren't you NetBanking?"
The phased campaign begins this week on radio and local print media in Atlanta and San Diego.
Plans are to take it to 10 additional markets in the fall.
The Internet-only bank had not previously used broadcast or direct mail. It is augmenting an on-line and magazine effort developed by USWeb/CKS, which was also responsible for NetBank's graphic design and navigation system.
Santa Clara, Calif.-based USWeb/CKS "has been instrumental in helping Net.Bank establish record growth and a leadership position in providing Internet banking services," said D.R. Grimes, the bank's chief executive officer.
NetBank, which calls itself "the largest FDIC-insured bank operating solely on the Internet," said June 9 that its accounts had grown to 35,000 from 17,000 on Jan. 1.
The bank emphasizes its low overhead and staffing requirements, saying its passes savings to customers. For example, the NetValue Checking account pays an annual 3.05% yield with no service charge and an opening balance requirement of $100.
"Net.Bank has clearly demonstrated that the Internet is a viable and widely accepted delivery channel for banking," Mr. Grimes said. "We continue to experience unprecedented growth compared to traditional banks."
NetBank plans to offer home equity and automobile loans with real-time approvals this year, followed by insurance products, on-line bill presentment, and virtual safe deposit boxes.
