Following in the footsteps of some of the nation's largest banks, a small Massachusetts thrift company plans to form its own Internet-only bank.

Brookline Bancorp, parent of a five-branch thrift just outside of Boston, has filed a request with state regulators to open Lighthouse Bank. The subsidiary, which could be running by the first quarter of 2000, will offer a full range of deposit accounts, credit cards, and mortgage loans.

Paul R. Bechet, chief financial officer of $907 million-asset Brookline, said his company is trying to capitalize on consumer's growing acceptance of the Web.

"Every day, more business is being done on the Internet," he said. "We think there is going to be a lot of banking opportunities on the Web, and we want to have the flexibility to go after that business."

Some of the nation's largest banking companies are already moving in that direction. Chicago-based Bank One Corp. garnered a flood of attention earlier this summer when it unveiled its subsidiary. Citigroup Inc. has also launched a Web bank, and Sovereign Bancorp, Synovus Financial Corp. and North Fork Bancorp all have them on the drawing board.

Brookline is barely one-twelfth the size of the next smallest of those entrants, but it does have resources beyond those of most institutions its size. In March 1998, it completed one of the most successful mutual to stock conversions in history, raising more than $135 million of capital. Since then, it has operated with a capital ratio in excess of 30%.

The holding company estimates it will spend between $500,000 and $1 million to start Lighthouse.

Mr. Bechet said Lighthouse's strategy will differ from other on-line banks. It will concentrate its marketing only on the Boston metropolitan area initially, eventually trying to attract customers from throughout New England.

Still, Internet banking experts were skeptical of Brookline's plans. While stressing the importance of community banks establishing Web sites for their customers, they questioned whether the demand for Internet-only banks is really there.

"The opening of these banks is coming ahead of massive customer demand for the service," said Christopher Musto, senior analyst with Gomez Advisors Inc. in Concord, Mass. "If you are going to do it, you had better be good at it, and you had better be patient."

He predicted that Lighthouse Bank will have trouble competing with the Internet affiliates of larger companies. Without the typical community bank advantages of local knowledge and friendly service, Lighthouse faces the daunting challenge of competing with larger banks on price.

"Bank One and Citibank both have database marketing down to a science," he said. "It is going to be as hard to compete with them on-line as it is to compete with them on credit cards."

Mr. Bechet predicted that the Internet bank will be profitable for Brookline by its third year. And Brookline is not going to abandon traditional banking any time soon, he added. The company remains interested in expanding by other means, such as with new branches or buying another institution, if the right opportunity arises.

"This is a bet on the future, but not our only bet," he said.

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