Continuing to search for the right strategic formulas for the Internet, some banks are trying something new with their corporate structures.

In apparently coincidental but trendsetting announcements this month, three bank holding companies said they are planning to establish separately chartered Internet subsidiaries.

The virtual banks would serve as vehicles for the companies-Sovereign Bancorp, Synovus Financial Corp., and North Fork Bancorp-to operate nationally without the costs of physical locations.

These companies also have their eyes on the profitability that has eluded many Internet businesses that have grown up within conventional banks.

Integrating an on-line banking venture with existing back-end computer systems and data bases has been the "greatest obstacle," said Steven Franco, senior analyst at U.S. Bancorp Piper Jaffray. "Starting an independent bank allows you to shorten the time to market by building from scratch."

To smaller banks, which face the double whammy of a limited number of Internet users and the high cost of systems integration, a separate on-line bank can seem especially attractive.

Though the "traditional bank operates business-as-usual, the new bank operates much leaner and much better Internet-only," said M. Arthur Gillis, president of Computer Based Solutions Inc. in Dallas. "It can achieve much higher profitability."

He said banks built primarily for "alternative delivery," such as Net.Bank Inc. of Atlanta and Telebank of Arlington, Va., are "proving that's the way to go."

NetBank, now seen as a glamour Internet stock, reported a first-quarter profit of $691,000, compared with a $151,000 loss a year earlier. Its account total has grown more than 50% since the start of the year, to 27,000.

The Telebank subsidiary of Telebanc Financial Corp., which will announce its first-quarter results Monday, reported a 120% boost in revenues in the fourth quarter, to $38.5 million.

"Instead of investors' owning an Internet bank, why couldn't a bank own it?" Mr. Gillis said.

Sovereign Bancorp's Internet offshoot, to be called America's Web Bank, would be added to an existing Internet offering that is attracting 700 customers a week. The Internet bank would aim to attract prospects outside the $23 billion-asset company's Pennsylvania-New Jersey home market.

The plan is emblematic of a dual marketing strategy that Matt Keukuk, vice president of Fairfax, Va.-based American Management Systems Inc., said should become more widespread.

Internet banking would first be a way to retain existing computer-savvy customers, but that type of operation would generally lose money, Mr. Keukuk said.

A separate, Internet-only bank would be created to expand customer bases and operate profitably, Mr. Keukuk said. He said the two-bank strategy would work particularly well for community or regional banks. But the opportunity is not limited to them.

Royal Bank of Canada, for example, is using its recently acquired, Internet-focused Security First Network Bank as a way to gain U.S. customers. It continues to support its Internet offering for existing Canadian customers.

Citigroup Inc. is also said by numerous analysts and consultants to be building a virtual bank. Extending its reach beyond physical sites is an acknowledged part of its e-Citi strategy, and contracts with such vendors as Sanchez Computer Associates Inc., Security First Technologies Corp., and BroadVision Inc. may be a part of it.

A Citigroup spokeswoman declined to give details of this effort.

America's Web Bank, expected to be launched in the fourth quarter, aims to attract 250,000 households in three to five years, said Jay S. Sidhu, president and chief executive officer of Sovereign. The Wyomissing, Pa., company's initial investment in marketing and development will not exceed $5 million, he said.

Unlike Internet-only banks that attract customers with high interest rates on certificates of deposit and checking accounts, Sovereign's venture is targeting women and college-educated people older than 30 who earn at least $50,000 a year.

"We are targeting only those markets we believe are underserved," Mr. Sidhu said.

America's Web Bank plans to cater to its target markets by offering electronic commerce, brokerage services, educational advice, and financial planning.

It would also "reach beyond traditional marketing," Mr. Sidhu said, by "aligning with customer affinity groups such as universities, employers, and retail outlets."

Brookfield, Wis.-based Fiserv Inc. is supporting Sovereign's Internet offering through its Pittsburgh service bureau. From its Milwaukee service bureau, Fiserv would run America's Web Bank, using software from Security First Technologies, which was split off from the Security First Bank now owned by Royal Bank of Canada.

The $10.5 billion-asset Synovus Financial Corp., which owns 36 banks in the Southeast, said it plans to roll out a separately chartered in 2000. The holding company plans to use the virtual bank to offer "price and product convenience" to the global Internet market, said Anna Dawahare, chief information officer.

Synovus said it will also roll out Internet banking to existing customers through an offering it expects to begin testing in July. It will be marketed as an additional service channel.

An alliance of M&I Data Services, Security First Technologies, and Total System Services Inc.-the last is Synovus' credit card processing subsidiary-is supporting the banking company's Internet efforts.

North Fork had been planning a separate Internet bank since it bought Branford Savings Bank in Connecticut two years ago, said Daniel M. Healy, executive vice president and chief financial officer of the $11 billion- asset company. North Fork sold four of Branford Savings' five branches and renamed the fifth, which has $120 million of deposits, Superior Savings Bank of New England.

Superior Savings' mandate is to telemarket deposit products throughout New England. Within 90 days, North Fork expects to disclose details of a plan to offer Internet services nationally through Superior Savings.

Stripping out much of its overhead, Superior Savings can offer higher rates on products, Mr. Healy said. "We didn't want to tap into North Fork resources, or we wouldn't be able to offer competitive rates," he said.

Some banks stop short of forming separately chartered Internet banks. Huntington Bancshares of Columbus, Ohio, treats its on-line bank as a separate line of business with its own profit-and-loss reporting.

The breakout of results lets a company avoid taking "a hit on its bottom line," said Mr. Franco of Piper Jaffray. Advertising, sales, and product development for on-line banking can cost "a small fortune," he said.

Banks need to follow the example of portals and electronic commerce companies, said Mr. Keukuk of American Management Systems. "The lack of profits there is somewhat intentional because these guys are going after size, brand awareness, and market share before profitability."

Mr. Sidhu of Sovereign said he is willing to invest-up to a point.

"We will not get into Web banking to turn out a loser," he said. "If in two years we are not profitable, we will get out of the business."

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