Internet portals began as search engines to find content among the Internet's roughly 500 million indexable pages.

Directories of links were then added. The leading portal, Yahoo, has about 450,000 sites in its directory.

Portals are free to users and depend on advertising revenue to survive.

This revenue grows the longer viewers spend on a site and the more pages they view, so portals began adding content and functions.

Today portals are actively competing with many other sites by offering shopping, news, auctions, and more.

Yahoo today draws about 31 million people a month, or about 50% of all Internet viewers.

Each viewer spends about one hour a month at the site, which might be 5% to 10% of all their Internet viewing time. Five of the 10 Web sites with the most traffic are portals.

Three ways to recognize portals are:

They carry lots of advertising.

They are able to search information outside their own site.

Numerous other sites link to them.

To build traffic, proprietary sites use branding, banner ads, and affiliate networks. Through affiliate networks, related Web sites are linked, allowing a site to use other sites as distribution channels.

Amazon.com is a great example, having some 280,000 affiliates.

Software from vendors such as iMediation track and monitor affiliate volumes and billings.

Affiliate networks are primarily used by merchants, but the concept can be extended to financial institutions.

Web sites related to financial services constitute only 4% of the top 500 Web sites as ranked by unique visitors in December 1998, according to Media Metrix. In general, traffic to the bank, card, and investment sites is driven by transactions with customers or prospects. The information- based sites are heavily focused on retail investors, which drive their traffic.

None of these sites really serve as portals.

The closest is bankrate.com, which does have some links to other sites.

The bloomberg.com and quicken.com sites also have some links. But all of these sites are carefully structured to keep viewers from going elsewhere.

None even contain a simple directory of all other bank links such as Yahoo offers.

It is surprising that only two banks make this top 500 list, but this should change as Internet banking picks up.

For example, if the BankAmerica and NationsBank sites were combined, they would make the list.

There is more untapped potential in the routine banking transaction market than in, say, the untapped on-line book sale market.

All of the financial Web sites in the chart have gone overboard to trap viewers, with the consequence that few viewers go there except for transactions.

For example, none carry any third-party ads, to avoid click-throughs to other sites.

In contrast, all the information sites except nasdaq.com carry advertising.

This entrapment works poorly in cases where the bank is trying to provide information. Citibank.com, for example, has invested heavily in student loan information.

It lists summary data on 5,000 colleges, yet specifically does not have a link to these colleges' Web sites. It does have a few links to scholarship aggregator sites.

Trapping the viewer with proprietary information is limiting. In its tax advice section, Fidelity.com links to virtual pages for Internal Revenue Service regulations, yet offers its own trust information.

Wells Fargo provides some summary proprietary information on GATT and the North American Free Trade Agreement, but a simple search on Yahoo yields far more.

Bank One offers up only five recommendations for business reading (with links) when there are hundreds available.

The problem is that other sources will do better jobs. Bank customers seeking an education will select Internet sites not driven by an entrapment philosophy.

These sites will make full use of the panoply of Web resources and will possibly build proprietary content only in addition to, but not in substitution for, other Web content.

Financial institutions are making only limited use of affiliate networks.

For example, wellsfargo.com links to virtual pages for Zachs research, News Alert, and auto insurance from American Insurance Group.

E-Trade links to street.com for investor news, fidelity.com, and Reuters for market news. Discovercard.com and Firstusa.com both have affiliate networks to 30 to 40 vendors offering merchandise discounts for same-card purchases.

There is a significant difference in the number of affiliate networks linked to transaction-oriented sites, compared to information-only sites.

Because they depend basically on their existing customers, none of the transaction-driven financial institution Web sites need to develop extensive affiliate networks.

Even a site like Nextcard, which advertises extensively elsewhere on the Web, has relatively few inward links. On the other hand, the information sites are extensively referenced.

Could a financial institution be an aggregator of financial services?

Banks that today are product supermarkets can transfer their existing products to the Web. But banks that were not supermarkets before the Internet came along face a challenge.

A comparison of mutual fund listings at Vanguard versus Citibank is instructive. Vanguard has drill-down links to descriptions, prices, fund services, and prospectuses. Citibank has just a list of other funds, with no details.

Few examples exist of true financial institution aggregators, for obvious reasons. Competitors are very reluctant to share customers.

Many customers prefer to do their own best of breed selection. Lastly, control of the inter-institution linkages are difficult and expensive.

In fact, the new entrants in the top 20 are focused differentiators, not portals or aggregators. This category includes Nextcard, which specializes in cards only, and E-Trade and Ameritrade which offer on-line discount brokerage.

E-trade's purchase of Telebank makes it basically a two-product company, not an aggregator.

The conclusion is that all financial institutions must properly conceptualize their opportunities and limitations in cyberspace.

Becoming a true portal or a source for finding numerous other things is no more realistic on the Web than it was in the branch or the call center. Controlling customers through the provision of information will prove just as difficult on-line as off-line.

Customers will seek the same features on-line from financial institutions that they seek off-line, namely swift, low-cost, and accurate transactions of various kinds.

On-line aggregation of different providers will face the same competitive barriers found off-line.

Affiliate networks will be used less than elsewhere because of the continuous nature of banking relationships.

Banks' thinking about cyberspace relationships and roles should be shaped by these types of thoughts.

The industry has plenty to do in building on-line service delivery channels without being sidetracked into quixotic and unrealistic efforts. Mr. Teixeira is president of Tower Group in Needham, Mass.

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