First the banks shoved us outside to ATM machines and now they're attempting to keep us at home with the Internet.

Online banking, like telephone banking, allows customers to have direct control over their accounts from home through their personal computers at any time of the day or night.

The attraction for the banks is lower costs in servicing customers. E-loan shook up the traditional banking industry by first offering loans which were about three-quarters of a percentage point lower than traditional competitors.

The company is now the largest online lender. E-loan plans on expanding into Europe and later Japan.

Net.B yank, a totally online bank in the US, opened for business in 1996, with operating expenses half that of a traditional bank. In response Bank One, the US's fifth largest bank, has created Wingspan Bank. Ironically Wingspan's advertising criticises the poor service in bank branches. Chase is also moving to create Chase.com. Citigroup has a similar venture underway. BankBoston has managed to move ten percent of its customers online.

Bermuda Commercial Bank has pipped the "big banks'' in Bermuda by announcing its plans for e-banking. Both the Bank of Bermuda Ltd. and the Bank of N.T.

Butterfield and Son Ltd. have indicated that plans are under way for separate offerings of Internet banking sometime in 2000.

The banks are of course looking to make savings in servicing their underperforming local retail operations. But they'll need a lot of computer-savvy customers before they'll start seeing such savings. Will those customers currently standing in lines at the branches go home? Probably not as soon as they would like.

The Island's banks will also have to carefully study how to avoid antagonising their customers by avoiding the glitches that have occurred in the UK market.

The real success stories in the online banking trend are in Scandinavian countries. Finnish-Swedish firm Merita Nordbanken has moved 25 percent of its customers online. SEB has a target of five million customers online in five years. The company is now penalising customers for using branch banks. SEB charges a fee for paying a bill at a branch, a move I find repugnant since it punishes someone who doesn't want to use a machine either at home or at an ATM machine.

The Bermuda banks and deposit companies have much to fear from outside competition. Onshore Internet banks, the traditional ones that have pushed on to the Internet interface with customers, and those that are purely Internet based, will now be more easily available to customers looking to park their longer-term savings at a better rate than they can get in Bermuda.

In Europe, Dublin-based First-e, which was launched in September as the first pan-European Internet-only bank, is currently offering 6.31 percent gross interest on savings in the UK market. In the UK, the Co-operative Bank has created Smile. Prudential in the UK has created an online subsidiary called Egg which is currently offering 6.25 per cent interest on savings.

In the 12 months since its launch, Egg has attracted 7 billion of deposits and 50,000 credit card users. Lloyds TSB, the UK's largest bank, has set a target of getting 1 million of its existing customers or 15 percent using Internet banking by the end of next year. Unlike the other traditional banks Lloyds and Barclays have kept their internet operations integrated into the main banks.

Meanwhile Prudential has created Egg, while Halifax has created Greenfield.co.

and HFC Bank has launched Marbles.co on the assumption that the entities will help prevent confusion among customers. But the most important reason is to keep any online foulups from harming the core image.

The banks have had problems in adjusting to the Internet. In April, Egg tripped up on a security problem which allowed some account holders to look at other customers' accounts. Egg has experienced a host of problems since start up mostly due to underestimating the number of customers willing to go online.

The customers have mostly stayed with Egg because of the high interest rate offered.

Halifax had a similar problem this month, having to apologise to 10,000 customers of its online brokerage service after a serious security flaw allowed some of them to gain access to other clients' accounts. The service was shut down for a day.

My online banking experience has been limited to Barclays, whose attitude online I found completely baffling. My wife was told at her branch that she didn't have to come in or go to an ATM machine to transfer money or check her accounts if she had an Internet connection.

Yet at the Barclays online site nothing seemed to work when I attempted to sign her up. I e-mailed customer service and was told I probably either had an earlier version of Explorer or the wrong plug in. I was also given a site to go to where I could download the appropriate software. While I was impressed by the diagnosis, I was put off by the level of sophistication the bank was in effect requiring of its customers.

If I hadn't inquired I would simply have assumed the site wasn't working. I couldn't click to get anywhere on the site. There's a lesson to be learned here. If the banks are going to push customers online then they have to make their sites as simple as possible to account for variations in software and customer's knowledge.

A month later I still haven't got around to going back to the site and attempting to sign up again, although I have downloaded the required software.

I found Barclays' attitude rather supercilious.

They're potentially going to save money by getting my wife online yet they're making it hard for her to connect. It's a strange attitude and one I hope isn't the norm as we move our transactions to the home. I also hope the traditional banks pass some of their savings back to the customer rather than being put on the books as higher operating profit. For that scenario to occur we'll all have to look to the completely online banks to keep them honest.

Tech Tattle deals with topics relating to technology. Contact Ahmed at ahmedelamin yhotmail.com or in France at (33) 467012599.