Internet Banking Wingspan Bank

1
Internet Banking Wingspan Bank

• Younghee Kim, Dongkwon Joo
• KAIST Graduate School of Management

2
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.

3
Internet Banking Trends (1)

• Current State of Internet Banking
• Source Booz Allen Hamilton Corporate Internet
  Banking Survey 4/97

4
Internet Banking Trends (2)

• Future Growth
• Source Booz Allen Hamilton Corporate Internet
  Banking Survey 4/97

5
Internet Banking Trends (3)

• Strategic Impact
• Source Booz Allen Hamilton Corporate Internet
  Banking Survey 4/97

6
Why Internet Banking? (1)

• Banks Crisis Recognition
• Transaction Cost Comparison
• Source American Bankers Association

7
Why Internet Banking? (2)

• Customer Access Points in the Future
• Source Booz Allen Hamilton Analysis

8
Why Internet Banking? (3)

• Productivity Comparison(Cost/Revenue)
• Source Company Financial Reports Industry
  Interviews

9
Why Internet Banking? (4)

• Online Banking User Status
• Source Gartner Group/Data Quest

10
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
• Consumers Growing Acceptance
• Changing Consumer Behavior
• Source Robert J. Dalsanto, Internet Banking
  Trends and Forecasts in Illinois CPA Societys
  1999 Financial Institutions Conference

11
Conceptual Structure of Internet Bank

• Source Namyong Lee, 1996

Banking Services
Client Environments
Electronic Payment/Assurance
Security/Encryption
Multimedia Base
Telecommunication Network
12
Internet Banking Architecture

• Source Kibal Rubin, 1996

13
WINGSPAN BANK.COMTM

• A division of First USA Bank, N.A.
• 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

14
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

15
Example General Banking (1)

• Accounts
• Through the web, the user can easily see the
  status of her/his accounts

16
Example General Banking (2)

• Transfer
• Through the web,
• the user can easily
• transfer the money.

17
Example General Banking (3)

• Preferences
• Through the web, the user can easily configure
  her/his accounts

18
Example Plan (1)

• Mortgage Calculator
• Through the web, the user can easily plan her/his
  mortgage loan.

19
Example Plan (2)

• Retirement Worksheets
• Through the web,
• the user can easily
• plan her/his
• life after retirement

20
Example Pay Bills

• Make Payments
• Through the web, the user can easily pay bills

21
Example - Insurance

• Auto Insurance
• Through the web,
• the user can easily
• sign in the auto
• insurance

22
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 WinspanBank.com is
  responding to customer needs

23
Security in WINGSPAN BANK.COMTM

• Browser Encryption
• MS Internet Explorer 5.0x 128-bit version
• Netscape Navigator 4.0x 128-bit version
• Secure Socket Layer(SSL)
• User Name and Password
• Dont 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

24
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

25
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

26
Wingspans Technical Cooperation
27
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

28
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

29
SWOT Analysis in Wingspan (2)

• Opportunity
• Increased internet using people
• Technology progress
• Payment
• Authentication
• Network
• Database
• Marketing Techniques
• Many affiliates
• Change in Customers 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

30
Internet Bank Score in Gomez.com
31
Internet Banking Approach

• Traditional Brick-And-Mortar Bank Case
• Bank One
• WingspanBank.com
• 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

32
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

33
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

34
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

35
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

36
Implications of WINGSPAN BANK.COMTM

• Proactive Destruction
• Separate Segmentation
• Value Generation through New Medium
• First Mover
• Test Bed for newly born Internet Banking

37
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

38
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 banks 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

39
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
• MA among Banks
• Competition for securing customers
• Sharing networks among banks
• Reduced employees
• New style branch
• In-store branch, investment center