Chase Manhattan Corp. has joined the vanguard of institutions addressing organizational issues related to the high-stakes Internet business.
In a memo released to employees last week, William B. Harrison Jr. said the bank would form Chase.com, a unit devoted to managing ventures in new technology and working with the bank's lines of businesses to tailor products and services for the World Wide Web.
The announcement, a highlight of Mr. Harrison's 21-day tenure as Chase's president and chief executive officer, indicates the importance the $361 billion-asset bank is putting on electronic commerce.
"We are not moving fast enough" on the Internet, the memo read.
Other banks have built similar units to begin reforming methods that have become ingrained. In recent weeks, Mellon Bank Corp. and First Union Corp. created high-level positions for electronic commerce executives.
"You don't want to tie down Internet growth by tying it to legacy businesses," said George A. Bicher, bank analyst at Deutsche Banc Alex. Brown. "You have to have flexibility and move with speed and not be tied up in bureaucracy."
Laura Klein, managing director of the eStrategy Executive Council, a group formed by Mainspring of Cambridge, Mass., said the challenges large institutions face "are not about legacy systems, but about legacy culture, processes, and business models."
She said the 40 electronic commerce executives from various industries who compose the eStrategy forum have identified the typical large- institution budgeting process as a roadblock to flexibility. "The old way of planning a budget 18 months out just doesn't cut it," she said.
Chase.com, which will group a number of existing Internet business initiatives together, will "bring greater focus and a greater sense of urgency," said Jim Finn, a Chase spokesman.
Joseph G. Sponholz, vice chairman, will head the unit while continuing to manage technology initiatives across the bank. The structure "will provide for a coordinated approach to migrating Chase's technology architecture to Web business models," the memo said.
Internet businesses that will become part of Chase.com include Intelisys, a business-to-business electronic procurement company, along with on-line brokerage, electronic bill payment and presentment, and development of the bank's Web site.
"This is an opportunity for Chase to operate more quickly than it has," said Christopher Musto, director of financial services at Gomez Advisers. He said Chase lagged most other large institutions in having a fully functional Web banking product.
Citibank may be the furthest along in creating a culture to foster fast Internet development. Last year it renamed its advanced development group e-Citi and allowed it to operate more independently.
"These guys give you the feeling they're sitting on the edge of their seats," said Avivah Litan, research director at GartnerGroup of Stamford, Conn.