Jay Sidhu, chief executive officer of Sovereign Bancorp, is trying to keep several steps ahead of his banking peers on what is quickly becoming a new frontier for hawking mutual funds - the Internet.

The 44-year-old Internet junkie's Web page offers a variety of financial planning services, more than most banks of Sovereign's size, observers say. But Mr. Sidhu, who oversees an $8.4 billion-asset thrift in Wyomissing, Pa., says he isn't brighter than other chief executives, just faster.

"I think in the next 12 months the smart banks will try to do something in the way of selling mutual funds over the Internet," he says. "I hope we'll be light years ahead of them."

Mr. Sidhu is trying to boost business for the 25 investment representatives who sell mutual funds and annuities through his network of branches in Pennsylvania, New Jersey, and Delaware. He says he believes the Internet will become a far more efficient way to bring financial planning services to customers than traditional routes.

Cross-selling brokerage services in branches and sending investment representatives onto the seminar circuit will always have their place, he says, but those methods aren't nearly as fast as reaching customers electronically.

"Why can't we be E-mailing suggestions and advice over the Net?" he asks. "Customers will be willing to pay for that."

Placing a dollar figure on the opportunity afforded by the Internet is difficult, to be sure, but that hasn't stopped Mr. Sidhu nor his counterparts at larger banks, mutual fund companies, and brokerages from salivating.

A recent study by New York consulting firm Booz-Allen & Hamilton boldly projects that Internet-banking households would reach 16 million by the year 2000, up from 100,000 at the end of 1996.

But even the most innovative banks must struggle for attention on the Internet with the no-load mutual fund giants, which are already offering the same services, says Gary B. Meshell, director of electronic financial services at Price Waterhouse LLP.

They are all going after the "self-directed" investor who lacks enough money to approach a private bank or brokerage firm. Such customers "are willing to buy across the Internet," Mr. Meshell says, "but the bad news is, they don't need the banks to provide them with information. There's enough unsolicited advice floating around the Internet."

Still, it's too early in the game to pick winners and losers, Mr. Sidhu says.

Customers who visit Sovereign's page on the World Wide Web can do all sorts of tasks, including calculating financial plans, walking through an asset allocation analysis, reading mutual fund performance reports, and getting descriptions of annuities and weekly financial news.

Visitors to Sovereign's site are greeted by the image of a colorful ice cream sundae. Clicking on the various scoops leads to bank offerings, including finding lending resources in the bank and calculating mortgage needs. The strawberry scoop is for customers seeking financial planning services.

But Mr. Sidhu isn't sitting back waiting for customers to come to his site. He plans to start marketing annuities via electronic mail. And next year Mr. Sidhu hopes to add quotes for term life insurance, which he will also market.

He added that when the prices of mutual fund companies become affordable he hopes to buy one and market its portfolios over the Internet, too.

Sovereign's site was set up in May by Marketing One Inc., a Portland, Ore., company that manages the thrift's brokerage and supplies its brokers. The financial planning part of the bank's comprehensive Web site is a copy of the Internet site Marketing One has for itself.

But what makes Sovereign unique among Marketing One's clients is its proactive approach. The thrift attached financial planning services to its own page so customers would associate the brokerage with the bank, not Marketing One.

But other bank clients "just don't get it yet," says Paul Patsis, chief executive of Marketing One. For other clients, Marketing One merely refers visitors to its Web page.

"Sovereign is way more advanced and forward-thinking than most banks of its size," Mr. Patsis says.

It's too early to judge the success of Sovereign's program, says Mr. Patsis. But he boasts of a young couple with a brand-new personal computer who found the bank's Internet site and invested $100,000 with a broker there.

That's not a bad return on the $125,000 investment Mr. Sidhu says he initially made to get a Web site and to maintain the program.

"We unfortunately don't have a very good tracking system right now," Mr. Sidhu says, "but all of our sales of mutual funds and annuities and everything are running almost double over last year."

Ironically, Mr. Sidhu had expressed skepticism about the Internet's potential last year at a conference held by Ryan, Beck & Co., a brokerage, according to Elizabeth Summers, an analyst there. But Ms. Summers says the thrift is no different from other institutions forced to grab for fee-based income and expand their menu of services.

For most banks the Internet has become an advertising billboard, she says. But Mr. Sidhu is showing he is aggressive by trying to come up with ways to use the Internet as a way to reach customers in their homes and undertake correspondence with them.

"He considers Sovereign a marketing company that happens to be in the business of banking," she says. "He's always scanning the environment looking for opportunity, and adapting."

Mr. Sidhu has become an inveterate Net surfer himself, spending several nights a week spying on the competition's Web sites, checking out the stock market, and obtaining business news.

He also used the Internet to plan a trip to Africa last August. By clicking onto a travel agent's Web site, he and his wife were able to get help in putting together an itinerary based on what wildlife would be visible when they were visiting.

"Now, this was customized just for us," he says excitedly. "You take that example, and imagine what banks can do! There's a tremendous need for customers to get money management over the Net."

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