Internet Banking – Wingspan Bank
Younghee Kim, Dongkwon Joo
KAIST Graduate School of Management
Internet Banking
What is Internet Banking?
Cyber Banking
On-Line Banking
Internet Banking
Types of Internet Banking
Pure Players: No Branches, No Drive-ups, No ATMs
Net Bank, Telebank, Compubank, Security First Network Bank, WingspanBank, etc.
Partial Players: Click and Mortar
Wells Fargo, Bank One, etc.
Internet Banking Trends (1)
Current State of Internet Banking
Source: Booz Allen Hamilton Corporate Internet Banking Survey 4/97
Internet Banking Trends (2)
Future Growth
Source: Booz Allen Hamilton Corporate Internet Banking Survey 4/97
Internet Banking Trends (3)
Strategic Impact
Source: Booz Allen Hamilton Corporate Internet Banking Survey 4/97
Why Internet Banking? (1)
Banks’ Crisis Recognition
Transaction Cost Comparison
Source: American Bankers Association
Why Internet Banking? (2)
Customer Access Points in the Future
Source: Booz Allen Hamilton Analysis
Why Internet Banking? (3)
Productivity Comparison(Cost/Revenue)
Source: Company Financial Reports; Industry Interviews
Why Internet Banking? (4)
Online Banking User Status
Source: Gartner Group/Data Quest
Driving Factors of Internet Banking
Economic Factors
No Bricks and Mortar
Fewer Staff Persons
Reduced Operation Costs
Technological Factors
Increased Electronic Delivery of Services
Enhanced Cross Sale Capabilities
Enhanced Customer Service Functionality
Lack of Geographical Restrictions
Market Factors
Growth of the Home PC Markets
Increased Connectivity to the Web
Explosion of E-Commerce on the Internet
Consumer’s Growing Acceptance
Changing Consumer Behavior
Source : Robert J. Dalsanto, Internet Banking: Trends and Forecasts in Illinois CPA Society’s 1999 Financial Institutions Conference
Conceptual Structure of Internet Bank
Source: Namyong Lee, 1996
Banking
Services
Client
Environments
Telecommunication Network
Multimedia Base
Security/Encryption
Electronic Payment/Assurance
Internet Banking Architecture
Source: Kibal & Rubin, 1996
Implementation, Management and Maintenance
ATM & Kiosk
Misc.
Telephone
PC
Front-end User Device
Network Connection
Telephone Network
TV Cable Network
Satellite Network
Internet Connection
WAN/VAN
PBX/ACD
ATM Network
Channel Application
Process Application
Web Site
Secured Server
Call Center
ATM/POIS
Database
Corporate
Messaging,
Transaction
Management
User Access
Network Connectivity
Finance/Sales
WINGSPAN
A division of First USA Bank, .
Founded on June 24th, 1999
Initiated by 5 managers in Bank One.
Location: Wilmington, Delaware
Investment Volume: $ 250 million (Bank One)
$ 150 million for Marketing
CEO : Terrence J. Ransford
Aug. 25, 1999: 75000 customers
End of 1999: 107,000 accounts
Mainly aims at maximizing your financial
potential while escaping some of the
pitfalls of traditional banking
Services in Wingspan Bank
Bank
Checking Account
Credit Card: Wingspan Bank Platinum Visa Card
Certificate of Deposit(CD)
Loans
Home Equity Solutions
Mortgage Marketplace
Brokerage
Stock, Options, Funds, etc.
Insurance
Auto Insurance
Homeowners Insurance
Renters Insurance
Life Insurance
Health Insurance
Pay Bills
Plan
Investing and Financial Planning
Information and Tool Distribution
Example – General Banking (1)
Accounts
Through the web, the user can easily see the status of her/his accounts
Example – General Banking (2)
Transfer
Through the web,
the user can easily
transfer the money.
Example – General Banking (3)
Preferences
Through the web, the user can easily configure her/his accounts
Example – Plan (1)
Mortgage Calculator
Through the web, the user can easily plan her/his mortgage loan.
Example – Plan (2)
Retirement Worksheets
Through the web,
the user can easily
plan her/his
life after retirement
Example – Pay Bills
Make Payments
Through the web, the user can easily pay bills
Example - Insurance
Auto Insurance
Through the web,
the user can easily
sign in the auto
insurance
iBoard in Wingspan Bank
What is iBorad?
Advisory Committee made up of real people whose objective is to give a voice to customers.
Made up of a diverse group of everyday women and men realize of online banking
Consists of 6 persons including TV PD, software engineer, convenience store owner, student, designer and so on.
Convenes quarterly assess how is responding to customer needs
Security in WINGSPAN
Browser Encryption
MS Internet Explorer 128-bit version
Netscape Navigator 128-bit version
Secure Socket Layer(SSL)
User Name and Password
Don’t share your password
Use the Log Out
Network Security and Monitoring
Multiple firewalls are used to shield WinspanBank systems and proprietary network
Confidential account information is not included in e-mail which is not secure
Initial Strategy (1)
Separate Organization
Flexible Liabilities Policy
Different Organization from Traditional Bank
New Brand Image
Wingspan: Broad Span in Banking Industry Area
Bank: Delivery of “Real Bank” to Potential Customers
Searches for new market segments
Concurrent Engineering
Technology + Marketing + Services
Partnership + Outsourcing
Using Partners
Creativity
Putting Together the Pieces
The site is developed by many partners together
Initial Strategy (2)
Focus on the customers
The Simple is Better
Business Solution Comes First and Technology is Secondary
Focus on Learning
Advantage when the cost of entry is low
Earlier learning than other competitors assures the customers the good services and experience
Initial Marketing
Free deposit of $100 when opening new account
TV and online advertising
Wingspan’s Technical Cooperation
Visa, Debit
Card
IBM, Edify, E-loan, InsWeb, M&I Data Services
Credit Decision System
Sanchez Computer Association Inc.
Data Center & Back Office Operation
VeriSign
Secure Site Authentication
Smart Money
Financial Planning Calculator
E-loan
Lone
Pershing
Support for Operation
Checkfree
Bill Payment
Chex Systems Inc.
Consumer Report
Bank One
ATM
ACH(Automated Clearing House)
Settlement System
Companies
Services
Notable Services in Wingspan
Planning Tools
Worksheets
Financial Calculators
Advice Columns
iBoard
Advisory Committee
Live Chat
Comparison Shopping for Insurance
Large Product Base
Immediate Request/Approval of Home Equity Loan
Call Center
“At Your Request”
Question and Answer
One-stop Shop
5% rate Cash-back
Shopping Cart for Information Service Product
SWOT Analysis in Wingspan (1)
Strength
Strong supporter – Bank One
Accumulated direct marketing know-how – First USA
Cool brand ID
First mover in internet banking
Weakness
Incomplete separation from Bank One
Weak Structure and funding status
Frequent system failure
Worry about security and privacy
SWOT Analysis in Wingspan (2)
Opportunity
Increased internet using people
Technology progress
Payment
Authentication
Network
Database
Marketing Techniques
Many affiliates
Change in Customer’s Appetite – Convenience and Practicality
Threat
Entry of other traditional banks or non-banks into internet banking
Alternative services – Telebanking
Change in bank industry
Financial information service provider
Reputation risk
Volatile customers
Internet Bank Score in
Bank of America
Citi f/i
Huntington
Citibank
First Internet Bank of Indiana
CompuBank
Wells Fargo
Bank One
Security First Network Bank
Score(Spring, 2000)
Firm
Internet Banking Approach
Traditional Brick-And-Mortar Bank Case
Bank One
“New Name, New Bank, New Customers”
CitiBank
Citi f/i
“Old Name, New Bank, New Customers”
Wells Fargo
Wells Fargo
“Same Name, Same Bank, Same Customers”
Online retail banking
A Progress Report
Wave I
New Electronic Access is born
Cost Reduction
Wave II
Disintermediation in Supply Chain and POS
Network Technology is used to increase operation efficiency
New Value Generation
Wave III
Combined Technology
Data Mining Technology
Mobile Computing Technology
Internet Technology
Industry Reformation
Most
Traditional
Retail Banks
NetBank
E-Loan
Unspecified
Progress
Wave I
Wave II
Wave III
Success Factor in Wingspan
Radical and Bold Renovation
Aggressive Marketing
Customer-Centric Site Design in the perspective Human Computer Interaction
Job Affiliation and Outsourcing
4 kinds of Financial Instrument Information Service
Transaction Cost Reduction
Competitive Interest Rates
Free Bill Payments
Repayment of ATM fee
Limitations in Wingspan
Dependence
Budget and Human Resources
Floating Information
Slugging Download Speed
Frequent System Failure
Lack of System Integration
Regional Limitation
Services
Security Systems
Ineffective Customer Services
Suggestions for Wingspan Bank
Strategic alliance with Bank One for financial base and shield
Independence is necessary
Financial supermarket
Various financial services
Relationship marketing
Strong brand image
Customized product
Cross-selling
Community
Collaborative Browsing
Implications of WINGSPAN
Proactive Destruction
Separate Segmentation
Value Generation through New Medium
First Mover
Test Bed for newly born Internet Banking
Safe Internet Banking - Security
Protection system for password and ID
Keeping from entering spoofer site – VeriSign
“128-bit encryption”
Compensation for online fraud
Auto lock out
Digital certificate
E-mail alerts about significant account activity
Technological factors
Filtering routers and fire walls
SSL
Backup servers
Cookies
Challenges for Internet Bank
Establishment of Brand ID
Significant for any new market entry
Achievement of Critical Mass to cover technology costs
How extensive are a bank’s Internet Banking Services?
Creation of Profitable Business Model
Banks are carefully regulated and safety and soundness in operations is the overriding concern for regulation
Maximization of Customer Retention
Delivery of Excellent Customer Services
Quick Response Time to Establish Accounts
Quick Resolution Customer Issues
Comprehensive Service Offerings
Impact of Internet Banking
Transition to information provider from liabilities management
Customer information system integration among each channel
Total financial service
Banking, Insurance and Brokerage service
Change in customer pattern – Record keeping
M&A among Banks
Competition for securing customers
Sharing networks among banks
Reduced employees
New style branch
In-store branch, investment center
