SCOTTSDALE, Ariz. - As more lending institutions open sites on the Internet, it is crucial that they provide a range of services, not simply mortgage or loan applications, a prominent analyst told thrift and community bank executives here.

Charlotte Chamberlain, senior vice president of equity research at Jefferies & Co., also emphasized the importance of other channels for delivering loans.

On-line banking and mortgage lending services are playing catch-up with Internet-based brokerages, which Ms. Chamberlain said are on the cutting edge of on-line financial services. She said customers have embraced on-line brokerages before Internet banking, though very soon on-line services will become requisite for banks.

"I'm seeing a sea change in this business, a wake-up call to the U.S. banking industry," she said, adding that on-line deposit-based accounts will soon become a basic service. "Would you use a bank that didn't have ATM machines?" she asked.

Ms. Chamberlain said a mortgage lending site won't help build brand identity. Large banks - such as Wells Fargo, which claims 10% of on-line deposit accounts - can establish a brand that customers will recognize. But she said "no one has 10% of the on-line mortgage lending market." In addition, people tend to shop around more for loans than for basic banking services.

Ms. Chamberlain said the best ways for small lenders to enter on-line mortgage-lending are to add services to their own sites and to enter partnerships with aggregate sites, such as E-Loan, Getsmart, FiNet, and LendingTree.

Ms. Chamberlain said on-line accounts will help banks retain customers. On-line bill-paying customers are four times as likely as branch customers to stay with a bank, she said.

Once a bank is on-line, she said, institutions can cross-sell other products and sell advertising on the site.

She also said small lenders face the opportunity to "have it all" for minimal cost. Some vendors can get a fully functional site up and running for as little as $4,000, she said.

"The real obstacle to on-line lending is that we still don't have point, click, own or point, click, loan," she said.

On-line banking and lending will soon simply be the cost of doing business, she said. In a speech to an America's Community Bankers national real estate lending conference this week, Ms. Chamberlain said of the Internet: "Not only is the customer always right, but now he or she is in charge."

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