Internet delivery of banking products has become the next big thing, but many banks that offer the service find that only a fraction of their customers sign up. Industry experts provided advice to help bankers boost their online business at BankWorld, an industry trade show held last week at Foxwoods Resort and Casino in Ledyard, Conn.

To build an online customer base, a bank should consider some of the same factors it does in opening a branch, such as location, branding, staffing and advertising, said Joseph J. Banas, an account executive at Connecticut On-Line Computer Center in Avon, Conn. Banks that contract out to offer online banking but do little else with their Web sites average about 5 percent participation among their customer bases.

We’re kind of holding at 5 percent and that is a problem because as everyone knows the Internet as an alternative delivery channel is not profitable, and we’ve got to do something about that, Banas said.

At this point, the average bank has introduced home banking on the Internet and may allow customers to apply online for loans. But to keep customers clicking on the Web sites, banks must add other features that make them sticky, a term applied to sites that generate return visits.

Banks that have been particularly successful at online banking have found ways to personalize the product for their customers. FleetBoston Financial, which has about 890,000 online customers after the merger of Fleet and BankBoston, offers a personalized portal as customers enter the HomeLink site. As the eighth largest bank in the country, Fleet can afford to invest a great deal in technology.

However, a number of companies have developed personalized portals or sales sites and contract with banks to put them on the Web site under the bank’s own private label. Through a personalized portal a customer can choose what they want to see when they log onto a site, such as news, stock quotes or weather updates. It is a good idea to allow customers to customize the site by choosing colors or adding photographs, Banas said.

If you haven’t thought about a portal as a strategy, you’re not really late, but this time next year you could be very late, Banas told bankers at the conference.

Community banks should think about what customers want from their bank’s Web site before revamping their sites. Few customers have interest in reading a message from the bank president and seeing his or her photo on the site, he said.

That’s so 1990s and we’re in the year 2000, Banas said.

While banks think of Web sites as a way to generate transactions, customers think of bank Web sites in terms of the services they can receive there. Customers want the ability to open an account online and maintain the account, as well as tell the bank when they have moved to a new address or changed their name. Customers also want to be able to go to the bank’s site to receive advice, request information and to file complaints or suggestions. A few companies have experimented with providing live e-mail responses to customer messages. Eventually banks may use video technology to allow customers to see the bank employee they are talking with over the computer.

Increasingly, a bank’s image will be tied to the quality of its Web site.

Twenty years ago customers perceived the branch as their bank, Banas said. Going forward, people will perceive their bank from its Web site.

Customers demand more than the electronic brochure that many institutions put on their Web sites in the late 1990s, he said. The Office of Thrift Supervision has signaled banks to consider their Web sites as businesses and tie the sites to marketing and retail efforts.

The Web holds opportunity for banks to generate fee revenue, which has become more important to banks as interest rate spreads have tightened. Many banks have begun online bill payment services, but fewer have started online bill presentment, where customers can see all their credit card and utility bills at one Web site. Large utility companies that mail bills to millions of customers will be willing to contract with bill presentment companies to save money, Banas said.

Even small banks can contract with companies to private-label stock brokerage services or insurance sales on their Web sites, and receive a fee each time a customer uses the service.

There are vendors out there that will pay the bank for your customer’s eyeball, Banas said. There’s only 24 hours a day and only so many minutes that a customer is on the Internet.

According to the FDIC, more than 1,200 banks offer transactional Internet banking, and the number could grow to 4,000 by the end of this year, said Mickey Goldwasser, marketing director for Open Solutions in Glastonbury, Conn.

It’s literally a land grab, Goldwasser said.

Banks have the advantage of having established trust relationships with customers. Banks can leverage that trust on their Web sites by linking community groups or retailers to their customers. Open Solutions has developed a way for bank customers to reach school menus or the local chamber of commerce through a local bank Web site. The goal is to make the bank the center of the online community, just as community banks have been the center of many small towns.

Even though many people use the Internet every day they only go to about 10 sites, so the goal of bank Web sites should be to have content that makes customers come back on a regular basis, Goldwasser said.

Statistics show that Internet users can be profitable bank customers. Goldwasser cited statistics showing the average age of Internet users is 40, and the fastest growing group of Internet users is people aged 55 to 70.