Bank One's Wingspan Fails to Take Off Online

Computerworld - Bank One Corp.'s WingspanBank.com, a stand-alone, Internet-only bank, will be downgraded to a test lab because it didn't attract enough customers, bank officials said last week.
Wingspan joins a host of other banks launched exclusively online that have had to move closer to their real-world sponsors or partner with other entities to survive. Most recently, Citibank closed down its online-only bank.
"Pure Internet plays are having a hard time getting off the ground," said Bank One Executive Vice President Bruce Luecke. "It's harder to make deposits. It's harder to make withdrawals." He declined to detail the online bank's fortunes other than to say, "It's weak right now."
When Wingspan was first launched in June of last year, bank officials said they would spend between $100 million and $150 million on the venture. Chicago-based Bank One hasn't made any further statements about its investment, and officials refused to comment on how much it would cost to fold Wingspan back into Bank One's online offerings. They did say, however, that Wingspan had 95,000 customers at the end of this past June - compared with 8 million customers at Bank One, more than 600,000 of whom used Bank One's online services.
Bank One will use Wingspan as a test lab for online banking products, such as a pilot program in which Wingspan customers can open their accounts at Bank One branches. Currently, Wingspan customers have to mail in deposits or use electronic transfers.
High Expectations
Other Internet-only banks have also learned their lessons. New York-based Citibank recently decided to close its online-only bank, Citi f/i, and merge it with Citibank.com, the online version of its physical bank.
And last spring, Palo Alto, Calif.-based ETrade Group Inc. bought the nation's largest independent network of centrally managed automated teller machines, Portland, Ore.-based Card Capture Services Inc., which had a total of 8,500 machines. The purchase came shortly after ETrade purchased Telebank, a leading online-only bank.
Some Internet banks have decided to partner with off-line firms. VirtualBank, a wholly owned subsidiary of 1stVirtual Inc. in Palm Beach Gardens, Fla., struck deals with three companies and will put physical branches in or near the companies' headquarters to provide banking services to their employees. Internet-only banks are targeting other niche groups as well.
But Wingspan's failure to take off may just mean its founders expected too much, said George Barto, an analyst at Gartner Group Inc. in Stamford, Conn. For example, Barto said, NetBank Inc. in Alpharetta, Ga., has reached $1.5 billion in assets in more than 110,000accounts - and boasts nine consecutive profitable quarters.
NetBank picked a niche - people who wanted an Internet-only bank - and stuck to its plans, he said, which made the bank successful. "The failure of Wingspan was [the result of] the expectations of its parent company," he said. "They wanted a million accounts, and that wasn't realistic."