Strategy fundamentals will be crucial to capturing the potential of the Internet at the bottom line. Though there are new business models and many new players to understand in the dot-com game, effective segmentation based on understanding customers and channel economics will remain essential to success.

As of today, one customer segment accounting for 40% of the customer population - call it the price-sensitives or price-optimizers - commands some 70% of investments. Yet this group contributes nothing or worse to the bottom line at most financial institutions. By contrast, other segments get little attention or investment but provide gobs of profit. Unless a bank's Internet strategy comes to grips with these facts, it will fail.

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