Last week, Citibank, the world's largest financial institution, entered the portal or Internet gateway business. It became a primary sponsor, or anchor tenant, of Netscape Communications' soon-to-be-released Personal Finance Channel.

Netscape is perhaps best known for its browser which is on 70 million personal computers around the world. But 11 months ago, it decided to diversify and become a portal of information along the lines of Yahoo! or America Online.

It set up Netcenter which is one of a new breed of portals that many electronic commerce experts see as one of the busiest junctions for online traffic. The site currently contains 17 consumer channels and has six million registered users, 30 per cent of whom are outside the US. In the autumn, other new channels will debut on the site and this will include the Personal Finance Channel. The three-year arrangement with Citibank will expose the bank's name to the Netcenter users. Initially, the finance channel will focus on investing and include interactive tools, financial advice, news and research. Eventually, online banking, insurance and mortgages will be added.

"We're convinced that Netcenter is the place to be to get the eyeballs for Citibank," said Mr Josh Grotstein, the Citicorp unit's director of global Internet and electronic commerce programmes.

Citibank joins other banks and financial service companies that have made such advertising-like deals with Internet Service Providers and consolidators such as AOL and Intuit's Quicken.com site.

This arrangement is a little different, though, in that it is based on a pay-for-performance model. Citibank will pay Netscape a minimum up-front fee and then the rest of the revenue will come from how many customers Citibank acquires from the channel.

The Internet is seen as a cheap acquisition vehicle and Citibank has set itself a target to have one billion customers by the year 2010. It currently has 100,000 customers in 100 countries. Its personal computer program, Direct Access, is available in five countries and will be in 15 by year-end.

The fact that Netscape doesn't get a larger upfront payment is perhaps indicative of the lack of clout it holds in the portal space. Just last month, for example, America Online received $25 million (£17.8 million) from four online brokers Ameritrade, DLJ Direct, E*Trade and Waterhouse Securities. They'll have a permanent button in AOL's brokerage centre for the next two years.

Mr Bill Doyle, director of money and technology strategy at Forrester Research in Cambridge, Massachusetts, said "there's no doubt that this deal is good for AOL whose total take from the deal $100 million comes in the form of upfront payments, not revenue sharing".

The Citibank/Netscape deal on the other hand means that both parties will share in the risk.

The alliance is "really a validation for Netscape and its Netcenter as a serious venture into consumer services", said Mr David Baltaxe, an analyst at Current Analysis in Sterling, Virginia. "For Citibank it is prime positioning on one of the most trafficked Websites around."

Mr Doyle of Forrester said links on a portal site are five times more effective in driving sales than banner advertisements.

"We at Citibank see portals as the TV networks of the future," Mr Grotstein said. "We're trying to use the Internet not just as a customer retention or service channel but to get that front-screen presence."

Whether Citibank and Netscape would invite other financial institutions on to the portal was unclear. Officials from the two organisations said Citibank's presence would "be extended" to all areas of the personal finance segment.

"This is Citibank locking up the space and blocking out the competition," Mr Doyle said. The Netcenter deal was announced four months after Netscape and Citibank formed a strategic partnership. The bank bought $20 million of Netscape equipment for use in electronic commerce services.

The two deals are separate but parallel said Mr Mike Homer, executive vice-president and general manager of Netscape's Netcenter division. "This really is the first time a portal company has gone out and worked with someone as a sponsor of a channel," he said.