Bank One’s Internet Venture Expected To Falter

A new report from Forrester Research, Inc. is projecting that WingspanBank.com, the six month-old Internet banking venture of Bank One Corp. (NYSE: ONE), is about to stall.

“Its parent companies’ financial difficulties and internal politics will debilitate Wingspan — and make it a cautionary example of what not to do when spawning a dot-com subsidiary,” the report said.

As if on cue, James W. Stewart III, president and chief executive officer of the fledgling service, announced that he will resign December 31st to pursue other opportunities.

The departure follows last month’s management shakeup at Bank One, and an acknowledgment of soft earnings at First USA, the credit card subsidiary that controls WingspanBank.com.

Stewart said that he is considering “several Internet-based financial-service opportunities” after 11 years with First USA. In addition to his duties at Wingspan, Stewart is executive vice president of partnership and Internet marketing for First USA.

Gary J. Marino, executive vice president of marketing at First USA, will assume responsibility for partnership marketing, and Michael J. Cleary, executive vice president of Internet marketing for WingspanBank.com, is slated to take over its day-to-day management.

The Chicago, Illinois-based Bank One is the nation’s fourth-largest bank holding company, with assets of more than $264 billion (US$).

How Not To Run A Dot-Com Subsidiary

In its report, Forrester harshly criticized the brick-and-mortar banking giant for making a series of initial blunders that preceded its recent turmoil.

“Bank One fired Wingspan’s chief advocate — First USA CEO Dick Vague — and demoted Bank One CEO John McCoy, the key patron of all of Bank One’s Net initiatives,” the report said. “That’s double bad news for a new subsidiary like Wingspan — which needs a senior internal evangelist and the protection of the CEO and board of directors.”

Additionally, Forrester pointed out that WingspanBank.com was built with a team of First USA employees — some of which still had First USA responsibilities that kept their focus away from the fledgling online bank.

On Friday, Bank One stock closed up 1/4 at 36 1/4. Its 52-week high is 63 9/16, and its 52-week low is 32 1/16.

Procter And Gamble Doing It Right

While WingspanBank.com is an example of how not to go online and be successful, Forrester added that Procter and Gamble’s online beauty product spinoff, reflect.com, is an example of how to launch a dot-com subsidiary correctly.

“Reflect.com has its own board of directors and will soon hire a dedicated CEO,” Forrester said. “P&G employees moving to reflect.com must formally resign from P&G in order to be hired by relect.com. And P&G seeded reflect.com with a pile of venture capital that can’t be taken back.”

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