barely begun to share in the Internet bonanza that has enriched companies like America Online and Yahoo.

The financial services glass remains much more than half empty, yet many executives are brimming with optimism.

That is what attracted 1,000 people to the La Quinta Resort near Palm Springs, Calif., last week for Online '99, the Fifth Annual American Banker Financial Services in Cyberspace Conference.

Speakers threw around all sorts of numbers to make their favorable cases: customers enrolled in on-line programs, anticipated sign-ups over the next three to five years, transaction costs and overhead projections, dollars spent on advertising and marketing, dollars raised in Internet-related initial public offerings.

But for all the success of a Charles Schwab & Co., with three million on-line customers, or banking companies such as Bank of America Corp., Wells Fargo & Co., or First Union Corp. that have each passed the million mark, the fact remains that the number of Americans banking and investing on the Internet is still in single-digit millions. America Online alone has about 20 million subscribers.

The conviction is firm -- and seemingly unanimously held by scrappy competitors on all sides of this battle -- that a mass-market financial services takeoff is at hand. It is just going to be an echo of the big bang that has resulted in half of U.S. households, roughly 50 million, being equipped with personal computers, and almost as many being wired to the World Wide Web.

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Most market research places the on-line banking population at 5% to 8% of U.S. households. The on-line investing population, allowing for some overlap, is within that same range.

The other 92% to 95% of households -- or at least the portion of them that are realistic candidates for on-line services -- are what excite the marketing folks.

Gomez Advisors of LincolnConcord, Mass., calculates that 4.3 million people do on-line banking, defined as having done at least one transaction in the 30 days prior to questioning. That is below the 5%-of-households mark, with one percentage point about equal to one million.

Gomez places the number of on-line investors -- people who have traded within six months -- at 5.12 million, senior analyst Christopher Musto said at the American Banker conference.

Of the 43.7 million people who both regularly use the Web and have investments, just 12% have on-line brokerage accounts. The remaining 88% are up for grabs and "rapidly evolving," said Mr. Musto, who advised his audience to "position differently than for the hyperactive traders who were the early adopters."

The mainstream newcomers tend to have longer-term investment horizons and may welcome more financial planning assistance, the analyst suggested.

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In any event, the stakes are high. Mr. Musto said that a single account increases a company''s market valuation by $1,000, well compensating for account-acquisition costs of as much as $300 to $400.

Pure economics, therefore, are spurring a marketing war. Brokerage company executives were particularly forthcoming about their advertising intentions.

National Discount Brokers Group, which with 160,000 accounts is barely within the industry's top 10, budgeted $30 million this year. Sandy Coughlin, director of business development, said that is "more than we spent in all other years put together." The company was started in 1994, and it is hoping to build its brand identity with television commercials using a duck as part of the imagery.

Ameritrade Holding Corp., which serves 505,000 customers, has a $200 million ad budget for this year, said president Michael Anderson. That includes direct mail and Internet banner placements. Spotlighting $8 trades, Mr. Anderson said, "the focus is on the brand and a simple message."

Fresh from a $1 billion IPO, TD Waterhouse Group, which at three3 million customers is second to Charles Schwab in the discount brokerage business, is going with a $100 million ad budget for next year. "That can be plus or minus $50 million, depending on market conditions," said Frank Petrilli, president and chief operating officer of the Toronto-Dominion Bank affiliate.

TD Waterhouse is out to make an impression by using pro basketball coach Phil Jackson and film stars Geena Davis and Jackie Chan in TV spots.

"Build a brand that is recognizable, or you will be out of business before long," Mr. Petrilli said. The company is contending in a market where "the top 10 players will spend $1.5 billion next year."

"We never would have been able to afford this kind of advertising without the IPO," Mr. Petrilli said. "There has been a change in mindset. If successful we will jump-start shareholder value."

TD Waterhouse begins with a cost advantage. Mr. Petrilli said its cost to acquire an account is well below average, at $58. And accounts have been growing at a compound annual rate of 50% for the last 11 quarters.

Mr. Anderson said Ameritrade's customer-acquisition expense is $159, down 41% in two years.

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Further quantifying the opportunity, Mr. Musto said 16 million investors are "up for grabs." Given their longer-term orientations, he said, "smart discount firms will adopt a full-service message." He said many conventional full-service firms are "at risk" and "not ready for prime time" on the Internet.

Charles Schwab, E-Trade Group, and Fidelity Investments had the biggest "shares of mind," in terms of being designated the primary broker by on-line customers surveyed by Gomez Advisors. Among the top 10, Schwab, TD Waterhouse, and Datek Securities were best in the ratio of primary customers to total customers.

Of the 16 million prospects, Mr. Musto said, 2.85 million are "on the cusp, likely, or very likely" to move into on-line brokerage within six months. A second wave of 660,000 he called "advice seekers" who are moving toward the Internet within six months but not yet with accounts.

That leaves 12.77 million holdouts who tend to perceive that on-line brokerage is for hyperactive traders and not for them. The occasional trading-site breakdowns that have made their way into news reports may contribute to this group's being "not fully confident about the reliability of the offering," Mr. Musto said.

He added that other financial institutions have a chance to make some gains.

"If you are a bank or insurance company thinking about Internet brokerage," he said, "new customers are coming, and new products are coming," such as after-hours trading and consolidated banking and brokerage accounts.

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Commercial bankers see and covet the same kinds of numbers.

A presentation by Ronald Braco, senior vice president of Chase Manhattan Corp., and others involved in the Spectrum electronic bill payment and presentment venture, put the number of potential on-line banking, investing, and financial-management households at 26 million by 2002.

They further concluded that bill presentment will follow in the wake of the "e-brokerage Internet success" in "optimizing the financial Internet offering."

Jane Wallace, senior vice president and electronic bill payment and presentment champion at Bank of America, cited a PSI Global projection that PC banking households would rise to 16% in 2000 from 4% in 1997. The on-line customers using bill payment services would increase to 65% from 48%, the data showed.

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Not much has been forthcoming from Bank One Corp. about the results of WingspanBank.com, its much-talked-about Internet-only operation that was begun in July. "Last I heard they had 90,000 customers," said technology consultant Patricia Seybold, founder and chief executive officer of Patricia Seybold Group in Boston.

Never has the widely held assumption been officially confirmed that Bank One's First USA subsidiary is spending $150 million to establish the brand, which Ms. Seybold described as "Calvin Klein meets banking."

That would be in line with the brokerage company ad budgets but would dwarf the $22 million that $4 billion-asset Telebanc Financial Corp. of Arlington, Va., had budgeted for 1999, according to chief executive officer Mitchell H. Caplan. By next year, Telebanc, a pioneer in direct, branchless banking, expects to have completed its sale to E-Trade, and its ad spending should rise to $50 million, Mr. Caplan said.

Bruce Luecke, president of interactive delivery services for Bank One Retail Group, spoke less about WingspanBank.com marketing than about the flagship banking site, www.bankone.com. Starting this week it is the subject of a multimedia ad campaign, cost undisclosed, in several cities, supplemented by a traveling "technology mobile" designed to "take our story, literally, on the road." Bank One wants to "popularize on-line banking by giving as many people as we can a chance to experience the concept firsthand," Mr. Luecke said.

Though 19% of the U.S. population is said to be on-line and personal computers are in about half of households, "on-line banking penetration as a percent of households still lags," Mr. Luecke conceded. Projected acceptance rates for next year in Bank One states include 3.7% for Illinois, 6.4% Texas, 2.2% Ohio, 3% Colorado, and 5.5% Arizona -- for an average of 4.2%.

He said bankone.com is "close to double the year-2000 projections already. In Illinois alone we are at 8.8%."

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Chester L. Thompson, senior vice president and general manager of electronic commerce at Huntington Bancshares in Bank One's former hometown of Columbus, Ohio, set what could only be characterized as a stretch target for on-line acceptance.

With Huntington already at a 13% signup rate, Mr. Thompson said, "I really don't believe we're twice as good as everybody else." But Huntington is aiming for 75% by the end of 2005, which would include access via set-top television boxes, personal digital assistants, and other remote appliances in addition to personal computers.

In keeping with its reputation for promoting self-service banking, Huntington by 2001 intends to activate an on-line account for all customers, giving them an automatic option that they would not have to specifically sign up for. But Huntington's philosophy is to "leave the choice of channel up to the customer" and not explicitly try to steer people, Mr. Thompson told an Online '99 conference session.

Michael Weiksner of the New York research firm Cyber Dialogue called the 75% goal "high, but achievable by a focused company that invests in customer service." He said he expects that most institutions "won't be as aggressive as Huntington."

In a sign that revenues can flow from Web offerings, Mr. Weiksner said 12.4 million people are subscribing to "paid content." Of 7.8 million adults who use personalized financial content, he said, 2.3 million use paid subscription services.

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Cyber Dialogue caused a stir in August when it released a report showing that one-third of the 9.4 million people who signed up for on-line banking in recent years had stopped using the service. That flew in the face of statements by bankers claiming that home banking services are "sticky," discouraging people from switching.

Jack M. Antonini, executive vice president of First Union Corp., said on-line consumer accounts have half the attrition rate and are twice as profitable as average. The cross-sell ratio -- the number of products per household, which is an indicator of customer loyalty -- is 6.43 for on-line customers versus a 2.75 average.

Aided by the WebNet, "customers self-select and move more wallet share," Mr. Antonini said, resulting in a "dramatic shift in the amount of business customers do with you." He said banks can forestall attrition problems by delivering "an outstanding customer experience," helping to "cut through the clutter, make unpleasant tasks easier, and provide a faster, more fun way to get services."

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"The financial account is by nature sticky; the cost of switching is high," said Christopher Solomon, head of business development at Security First Network Bank of Atlanta.

In what amounted to a pep talk to bankers, Mr. Solomon said they are in a "sweet spot" to create a "community of value" that attracts and keeps customers. "You have a higher level of trust than Yahoo," he said, giving an example of a Web company that would be hard-pressed to operate as a regulated financial institution. Banks "have solved the hardest part of the puzzle" with their transaction capabilities, and they can license content from services such as Reuters to keep on-line customers informed and coming back.

Security First, the pioneering Internet-only bank owned by Royal Bank of Canada, still had to overcome its lack of an established branch network. It offers 6% interest on checking "to get people over the hurdle to try us out. Then we keep the relationships," Mr. Solomon said.

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