InformationWeek

The synergies between Chase Home Finance, the mortgage and home-equity division of the bank, and Chase.com resulted in Chase becoming an anchor partner in HomeAdvisor. Microsoft was developing HomeAdvisor when Harrison and O'Leary met with Microsoft CEO Steve Ballmer in Redmond, Wash., last fall. Chase Home Finance and Microsoft were working together on content for Chase's site when the executives hit on the idea to combine their efforts and bring Chase into HomeAdvisor.

"Because we were already working together, there was an intimacy," says Gregg Gorman, executive VP of Chase Manhattan Mortgage. "The two sparked on each other, and the timing was right."

Though a deal with a technology force such as Microsoft may open up opportunities for Chase and lend credibility to its efforts, it can also create conflicts for the bank. For instance, Chase continues to operate its own online mortgage site, which competes with HomeAdvisor. In addition, several Chase competitors such as Bank of America are also HomeAdvisor partners and offer their services on the site.

In addition, by selling directly to consumers online through either site, Chase threatens its network of mortgage brokers, whom consumers can side-step by using the Web. Outwardly, Chase seems comfortable with the overlap.

By hedging its bets, Chase is treading familiar ground. "We have to go where the market is going," Tufano says. "If old forms of revenue get reconstituted, then we want to be there."

That execution will be a challenge for Chase, which is pulled between two cultures. "Moving a big organization as rapidly as they want to move has a lot of risks attached to it," says Jeff Kutler, technology editor at Institutional Investor, a financial-industry newspaper. "They're still in the business of banking, and they still have to maintain the tenets of a bank, be conservative, and maintain their value. To succeed on the Internet, they have to do just the opposite."

Chase maintains that through the distinct culture cultivated at Chase.com, it's able to do both. O'Leary mentions the freedom of the business unit to act quickly and its greater tolerance of risk. But it's clearly a balancing act for Chase.com, which also talks about the importance of due diligence in making decisions. After all, its mission is to serve a company in an industry rooted in stability and safety. "There's the issue of matching fast-moving technology with current business practices," says Intralinks CEO Mark Adams. "The challenge for all of us is to ensure what we develop meets human needs and is absorbable. We're looking at changing an industry that has been doing business the same for 200 years."

Many are taking a wait-and-see approach to Chase's ventures. They say the company faces many hurdles, including attracting and retaining technology talent, as well as aligning with the right partners and projects, which is always a gamble.

"It's not too much in dispute that Chase has tried to affect a cultural transformation," Kutler says. "A lot of this is an image being projected by the bank. It's important and reflects a vision. But we still don't know if it's being taken to heart throughout the organization."

Some question the speed at which Chase can execute the deals. For instance, the E-procurement venture with Deloitte & Touche, originally expected to begin operation next month, has been pushed back another three to six months. "It's moving slower than we anticipated," Fattell says. "We're building a solid infrastructure and still negotiating how it will work."

But other projects are executed swiftly with no complaints from business partners. The Helsinki, Finland, online brokerage startup eQ Online began working with Chase in November on a cash-services system that lets eQ clients execute in seconds trades via the Web with the Helsinki and Frankfurt stock exchanges. By mid-January, Chase and eQ had the system up and running.

"The speed was really unbelievable, and the solution is unique," says Andreas Guenther, a director at eQ's Frankfurt, Germany, branch.

What makes Chase so interesting is that its strengths--its brand, millions of customers, access to capital, and infrastructure--make it vulnerable to startup companies that have nothing to protect and everything to gain. Chase.com should help shield the bank from some of that risk.

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