In its never-ending quest for better ways to tap investors, Wall Street is furiously building on-ramps to the information superhighway.
Like their commercial bank rivals, many investment firms see vast potential in using the Internet to reach technology-savvy consumers, specifically through the use of a portion of the sprawling computer network known as the World Wide Web.
The Web is a sophisticated interactive network that allows personal computer users with "browser" software to view and store text, color graphics and even video images. Originally designed for scientists and academics, the World Wide Web is being increasingly utilized by for-profit enterprises.
And it's not surprising that financial institutions are eager to get a piece of the action. Over 75 banks, ranging from mighty Citicorp to $50- million asset Kingfield (Maine) Bank, have already set up their own World Wide Web sites on the Internet, according to Online Resources and Communications Corp. in McLean, Va.
In comparison, only 27 investment services companies have built the so- called "home pages" on the Web.
But in terms of actually doing business on the Internet, those numbers can be deceiving, observers say.
Practically all commercial banks' Web sites currently offer little more than self-serving corporate overviews with some abbreviated product descriptions, a real snooze for most Internet aficionados.
In contrast, investment companies - including such heavyweights as Fidelity Investments and Charles Schwab & Co. - are starting to use the Internet to provide clients with a variety of interactive services. These include financial planning "games," real-time stock quotes, electronic prospectuses, regulatory filings and company research.
"Compared to banks, Wall Street has really gone crazy about exploiting the Internet - they're going full speed ahead," said Robert Frasca, president of Galt Technologies Inc., a Pittsburgh-based technology company that currently works with about 65 financial firms to provide services over the computer network.
"Banks have a very different mentality towards using the Internet versus brokerage firms," observed Valerie Kahn, president of Jersey City, N.J.- based Portfolio Accounting World-Wide, also known as Pawws, another firm offering investment services to cybernauts. "Wall Street firms are more interested in making money right now, while banks just want to establish a presence."
Bankers counter that they are taking a more conservative approach to using the Internet because of its notoriously poor data security safeguards, making it relatively easy for interlopers to snoop into customers' bank accounts or even alter transactions.
But data security is not such a bogeyman for most of Wall Street, Mr. Frasca said. "Banks are obsessed with security because they deal with cash transactions," he explained. "For investment firms, its the delivery of information - the marketing brochures, company research, prospectuses - that's the product."
Galt and Pawws, a unit of Security APL Inc., a Chicago-based developer of portfolio accounting software for brokerages, have been pioneers in bringing these types investment products and services to the Internet.
But they also face stiff competition from the established commercial on- line service companies - America Online, Compuserve, and Prodigy - which already offer a blizzard of non-Internet electronic offerings for investors, albeit for often hefty fees.
The on-line investment market is already big. Over 400,000 people regularly use their PCs to access some type of investment service, according to Forrester Research.
The key this success has been Wall Street's willingness to use the Internet for more than just product advertising, Mr. Frasca said.
"Electronic billboards, that's not what the Web is about," he explained. "It's about creating value for the users." He cites Galt's Web site, called Networth, where investors can download stock quotes, newsletters, and past performance charts tracking over 60 different mutual funds.
Over 85,000 potential investors log onto Networth on a typical day, the company says. Investment firms pay Galt to list their financial products on Networth, but Mr. Frasca said the new business generated can easily offset that cost.
"One of our clients, Montgomery Mutual Insurance Co., said 4% of the people who accessed product information ended up investing money," he said. "Anyone on Wall Street knows that's a phenomenal hit rate."
He also added that despite the popular perception the Internet is populated mainly by PC-addicted members of Generation X with little funds to invest, a recent survey of 475 Networth users found that 61% were within 10 years of retiring and 71% already owned between three and 10 mutual funds.
Pawws' Ms. Kahn declined to say specifically how many people were using her company's Web site, but echoed Mr. Frasca's enthusiasm about the mushrooming use of the Internet for investing.
"The number of people who sign up for our fee-based services doubles every two to three weeks," Ms. Kahn said. "I don't think there is a better market for brokers than the Internet."
She added that Pawws offers PC users a sophisticated on-line portfolio accounting system, as well electronic order entry systems to two discount brokers, National Discount Brokers and The Net Investor, a division of Howe Barnes Investments Inc.
Pawws charges users $8.95 a month for its basic service.
Though smaller Wall Street firms have set up shop using third-party services like Pawws or Networth, bigger firms like Schwab, Fidelity, Gruntal & Co., and Salomon Brothers have launched their own World Wide Web home pages.
Schwab's Web site, which went on-line earlier this month, is maintained by Galt, but is separate from the Networth service. The company's Internet service is designed to complement the firm's StreetSmart proprietary on- line quote service and portfolio manager, said William Pearson, Schwab's Internet project manager.
Right now, the firm's Web site offers detailed product information on Schwab's no-load mutual funds, as well as a program that helps investors decide which fund is right for them.
"What we're providing right now is strictly information via the Web, but as we get our feet wet we'll move toward more interactivity," Mr. Pearson said.
He added that the Internet is "an excellent medium for delivering investment research. The information can be updated in real-time, and you don't have to kill trees."
