A Wit SoundView Group Inc. analyst who has initiated coverage of technology companies that cater to financial institutions says he is upbeat about the prospects of what he calls an undervalued sector.

“We think it is an opportune time to get into e-finance,” said Chris Siedman, the Wit analyst who has been following the sector for two weeks. “We are now starting to see a ramp-up where people are more comfortable managing their finances online, and electronic bill payment and presentment is poised to take off this year.”

Mr. Siedman said the sector coverage is meant to distinguish electronic finance companies from firms that rely on the Internet as an all-purpose delivery channel to consumers. “We think to date most of the e-finance and other technology stocks have all been painted with essentially the same brush,” he said.

The market soon will make the same distinction among these firms as Wit, he said. “As trends continue to develop during the next year, a number of these companies will show growth on the top line and improvement on the margins, and then the market should respond.”

All of the six companies Mr. Siedman is following — LendingTree Inc. of Charlotte, N.C., Corillian Corp. of Beaverton, Ore., Digital Insight of Calabasas, Calif., Online Resources Corp. of McLean, Va., S1 Corp. of Atlanta, and NextCard Inc. of San Francisco — are trading well below their potential, he said.

These companies “have the best near-term potential for investors,” because they “enable traditional financial institutions’ online offerings,” he said.

Most consumers are banking online with the traditional financial institutions that the e-finance firms target, rather than switching to Internet-only banks, Mr. Siedman said.

Also, of the approximately 22,000 banks and credit unions in the United States, two-thirds do not yet offer Internet banking, he said.

Soon smaller financial institutions that do not have the resources to build and maintain Web platforms will begin partnering with technology companies to offer Internet banking to satisfy customer demand and keep up with their larger competitors, he said.

Andrew D. Klein, a former Wall Street attorney and the president of Spring Street Brewing Co. in New York, took the brewery public in 1995 in the first initial public offering conducted over the Internet. A year later he started Wit Capital Corp.

Mr. Klein had planned to democratize the IPO process for retail investors by building the world’s first investment bank and brokerage firm dedicated to arranging public offerings of securities on the Internet, Mr. Siedman said. However, the firm has since switched its focus from individual investors to institutional ones, he said.

In an effort to quickly boost its research and investment banking capabilities, Wit Capital bought SoundView Technology Group Inc., a Stamford, Conn., technology banking boutique, in January 2000 for $320 million and changed its name to Wit SoundView Group Inc.

With the purchase, Wit’s roster of analysts more than tripled, to 44. Today the firm has 50 analysts.

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