Laboratory for innovation: JPMorgan Chase

Global Finance, Summer 2001

Chase Manhattan Corporation launched its first Internet banking application in early 1997. Since that time, Chase has offered its customers a variety of e-finance services and also has been instrumental in pushing the industry forward.

In December 2000 Chase merged with J.P. Morgan; as a result, the combined JPMorgan Chase has more than $715 billion in assets, 32 million customers, 300,000 small-business customers, and 5,000 corporate and institutional clients. By June 2000 Chase had more than 3 million online banking customers, 14% penetration of its customer base.

Chase's Internet strategy includes creating new technologies and growing the effort overall through LabMorgan, the e-- finance incubator/venture capital arm of J.P. Morgan. The Lab has helped finance, build, and market 67 ventures since January 2000, including Yodlee, Metiom, Kinexus, FxNet, Financial Oxygen, Mobiliocity, Tantau, PayPal, Si, and SWIFT. Since the merger, Chase has had a hand in the creation of, and access to, these technologies, which the bank uses throughout the Chase.com site as well as in its partnerships.

In addition to the in-house development and outsource relationships for its e-finance offerings prior to the merger, Chase has leveraged its new relationship with LabMorgan to create and deliver new services to its personal, small-business, high-net-worth, and corporate clients. These clients can use the www.chase.com site as a home page to log onto the bank's co-branded and co-- marketed services.

Though the retail services are still handled under the Chase brand and the commercial services under the J.P. Morgan brand, JPMorgan Chase maintains uniformity in its offerings.

CONSUMER E-ERVICES

Chase's services for personal banking customers include account balances on checking, savings, credit, mortgage, and other loan accounts; transactional histories; funds transfer; bill payment; a financial portal; shopping; account aggregation; personal financial management software; and, soon, wireless access. Chase uses Corillian's Voyager product for its standard e-banking application and CheckFree's bill payment services.

The bank aims to facilitate customer adoption of Chase.com as a one-stopshop for Internet banking. To further that goal, Chase launched its aggregation of accounts service in October 2000 in partnership with Yodlee, a former LabMorgan venture and leader in aggregation services on the Internet.

In November Chase agreed to license Digital Insight's Consolidator product for retail EBPP (electronic bill presentment and payment). Chase is a partner with several other financial institutions in the Spectrum Electronic Bill Consortium, another former LabMorgan venture, which is designed to set the technological standard for EBPP.

Chase was working with Tantau, also a LabMorgan venture, until November 2000 to offer wireless banking to its personal e-banking customers. Tantau was acquired in December 2000 by 7/24; however, Chase's wireless banking is set to be released this year and will enable Chase.com customers to access their Chase account information via any WAP (wireless application protocol)-enabled cellular phone, laptop computer, or personal digital assistant using any wireless carrier.

Chase offers financial planning tools on its site and through co-branded services, including SmartCents (www. smartcents. com), its financial education portal for parents and children. Chase also offers personal financial management software through Turbo Tax and Quicken. Home finance, located at www.chase. com/homefinance, is available to Chase home mortgage customers.

For its high-net-worth private banking clients, Chase offers Kinexus' complete snapshot software to aggregate multiple asset and liability types. Kinexus is another LabMorgan venture as well as a Chase Capital Partners portfolio company.

CORPORATE E-SERVICES

Chase has focused its corporate e-services on the small-business market. A small-business owner can log onto Chase.com and perform all the functions a personal customer can, as well as pay taxes (for a $5 per month fee) and payroll ($10 per month). Using its relationship with LabMorgan, Chase has developed and launched numerous e-- business services for its small-business customers and hopes to convert them to online customers with e-services that include Web site-building software, simplified e-billing services, business surplus marketplaces, small-business leasing, document storage, and investment services.

bPurchase.com is Chase's B2B marketplace for small businesses. At www.bpurchase.com, which is powered by Metiom, a LabMorgan venture, Chase customers can compare and purchase office equipment from partner vendors. Through TradeOut.com, small businesses can sell surplus inventories in an open online marketplace. With Derivion, Chase has developed simplified e-billing solutions for small businesses. Chase plans to standardize Derivion's e-- billing through its participation in the Spectrum Consortium.

Chase offers real-time equipment leasing in amounts between $3,000 and $250,000 at www.smallbizleasing.com. Applications for less than $35,000 will be reviewed and decided on in less than five minutes. Moreover, a partnership with Kinzan.com helps small businesses create a fully transactional e-commerce Web site in a matter of minutes.