As Internet use spreads to broader segments of the population, financial institutions will need to simplify their Web sites to persuade these new users to bank and manage their investments online, a study asserts.

Advice and the delegating of financial decision-making on Web sites will become more important as younger, less Internet-savvy, more conservative, and lower-income customers use Internet banking, said a study released last week by Jupiter Research, a division of Jupiter Media Metrix. Financial institutions may find that the “Byzantine” Web sites they have developed are too sophisticated for these customers.

Robert F. Sterling, the study’s lead analyst, refers to the dilemma facing financial institutions as the “blinking 12:00 problem.” Like VCRs that are so complex their owners are unable to set the clocks, leaving them perpetually flashing 12:00, financial Web sites have become too complicated for some people to use, he said.

“As they offer more and more services, they bloat with complexity,” Mr. Sterling said. “So for the next 18 months you’re going to see brokerages, and especially banks, ‘right-sizing’ these sites by offering a more limited range of choices to customers, based on who those customers are.”

Many of these clients will be “GLI” customers, an acronym standing for greed, laziness, and ignorance, Mr. Sterling said. Jupiter predicts that 44 million households will bank online in 2005 and, of those, 37% will have incomes of less than $50,000.

“Most people participate in the stock market not because it’s fun but because they want the capital benefits of equity ownership,” he said. “At the same time, they’re not willing to do the work and are not up to speed to maximize their outcomes.”

The GLI customers have implications for financial services companies. “Now you have to serve the client and tell them what to do if you want to attract the mainstream investors,” Mr. Sterling said.

Jupiter predicts that the number of households trading online will more than triple, to 35 million — more than one-third of U.S. households — by 2005.

About 11 million of the 48 million households that trade in the United States do so online, offering financial institutions a big opportunity. These institutions, however, must compete with long-established firms and private bankers who have made Internet services available to their clients.

If the study’s assertions are correct, the role of financial institutions will increasingly be to act as intermediaries between customers and their wealth. Financial institutions should offer personalization through account aggregation and customized Web interfaces, the study says. Companies that view customers as self-directed, it contends, “will lose their ability to compete.”

But David C. Stewart, vice president of Global Concepts Inc., a payment systems consulting firm in Atlanta, said Jupiter’s study may overestimate the needs of online financial customers. “I don’t think these less sophisticated users will require that much effort in order to be sold,” he said. “It’s the really high-tech folks that would need more data mining.”

He added, “I don’t think people think about their finances as much as we in the industry like to believe they do. Outside of investment advice, I don’t know a whole lot of people who want their banks to start giving them advice.”

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