As Internet-only banks cast about for ways to improve profitability, two entrants in the field are trumpeting their narrowly defined product sets as the keys to making money.

Though industry analysts have been vocal in urging Internet banks to target specific market niches, a focus on specific products has not been so widely advocated. DeepGreenBank.com and OneCore.com may be exceptional in adopting a narrow product focus.

DeepGreen, a subsidiary of Third Federal Savings and Loan Association of Cleveland, is focused almost solely on offering certificates of deposits and lines of credit. Bedford, Mass.-based OneCore.com specializes in online financial products for small businesses.

Other Internet banks have pursued a range of tactics in the drive for profits. Some are adding branches and automated teller machine networks to appeal to a wider audience; others have begun charging fees on accounts that fall below a minimum balance.

“Our philosophy is to only offer features that aren’t currently in the marketplace,” said Jerry Selitto, chief executive officer of DeepGreen. “Consumers are a click away, and they will leave unless you can offer some competitive features.”

DeepGreen offers a six-month certificate of deposit paying 6.4%, a one-year CD paying 6.49%, and a two-year CD paying 6.21%. It charges 8.95% for its home equity loan.

Mr. Selitto defended the high rates DeepGreen pays as an essential element of offering online services. “I think a lot of people are paying a lot of lip service to the Internet and are not really offering any product advantage online,” he said. “They are not delivering on the Internet promise because their service is the same service you can get in a branch.”

DeepGreen targets “grown-ups,” Mr. Selitto said — “those people with the ability and willingness to meet their financial goals in a responsible way.”

Recently the bank initiated a business-to-business service that lets customers get approvals within two minutes for wire transfers through DeepGreen.

OneCore.com, formed in March 1999, targets businesses with 100 employees or fewer. Most of its clients have 20 to 50 employees.

“We have a laser-beam focus,” said Jack Littman-Quinn, chief executive officer of OneCore.com. “Not a lot of companies specialize in the unique needs of small businesses.”

OneCore is in partnerships with other companies to bundle administrative services, such as cash management, payroll, 401(k) plans, health insurance, workers’ compensation, credit card processing, lines of credit, leasing, and bill payment on a single site that lets small businesses manage them all at one place. To expand, OneCore plans to let financial institutions private-label the Internet bank’s services and offer them to their small business customers, Mr. Littman-Quinn said.

Some new Internet banks insist the original Internet-banking model can work, even without a niche target or a physical presence.

GiantBank.com of Fort Lauderdale, Fla., for example, opened its virtual doors to the country last July. It is not targeting a particular niche of customers beyond those who are comfortable on the Internet.


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