Further extending its reach into banking, Donaldson, Lufkin & Jenrette's on-line brokerage has added a mortgage service.
Through an agreement with the on-line mortgage broker E-Loan Inc., any visitor to DLJdirect's Web site can compare mortgage rates from leading national lenders and apply for the loans.
Financial terms of the agreement, which was announced last week, were not disclosed.
The service broadens DLJdirect's line of banking products, which includes an asset management account with a gold MasterCard, check writing privileges, automated teller machine withdrawals, and a line of credit.
On-line brokerages will continue to "cherry pick" products from the banking industry, said Bill Burnham, senior electronic commerce research analyst in Credit Suisse First Boston's technology group. "It's a way to generate a few extra bucks off your customer base," Mr. Burnham said, adding that he expects to see more such deals.
E-Loan also supplies on-line mortgage services to E*trade Securities Inc., Yahoo! Inc., and the Motley Fool Web site. Several banks and credit unions also offer private-label versions of E-Loan on their Web sites.
Brokerage firms will be selective about the banking services they offer on-line, Mr. Burnham said, because many products, like checking, do not generate high margins.
Blake Darcy, chief executive officer of DLJdirect, said the unit has "no high hopes that in the short term" its on-line bank offerings will affect profitability. "But in the long term, we think it would."
As a wholly owned subsidiary of the New York investment bank, DLJdirect's strategy is to attract high-net-worth investors by offering an array of sophisticated products and unparalleled customer service on-line. "We're targeting clients with $100,000 or more to invest," said Mr. Darcy. "That's where our strengths are."
He added that the unit is not particularly concerned about its ability to compete against banks because they "seem to have a lot of trouble with just the on-line banking portion."
With E-Loan, DLJdirect plans to let investors use the value of their investment portfolios as collateral for residential mortgages. DLJdirect is among the first on-line brokerage firms to offer this product.
"DLJ helps people manage their assets. E-Loan helps people manage their debts," said Doug Galen, vice president for sales and business development at E-Loan in Palo Alto, Calif. "Together we help people maximize their net worth. It's a natural combination."
He added that on-line investors are more aggressive in making sure they have the best mortgage rates.
DLJdirect plans to market the service to its 500,000 customers through advertisements on its home page, monthly mailings to investors, and notices in its newsletter, said Denise Benou Stires, DLJdirect's senior vice president and marketing director. Though anyone can gain access to the service, the firm does not yet expect to market it to the general public.
The Jersey City brokerage, formerly known as PC Financial Network, began offering on-line trading 10 years ago. Since then, it has executed more than $41 billion of on-line transactions.