To the Editor:

Readers of your May 10 article "Citi Tech Chief Urges Regulators to Let On-Line Banking Develop" do not have an accurate report of what was said. In particular, the article fails to differentiate the potential impact of on-line banking experiments by banks, which are regulated, and nonbanks, which are not.

I had noted at the American Bankers Association conference on May 8 that the marketplace could expect about five years of experiments by banks and nonbanks in the area of electronic commerce and on-line banking.

I also said that experimentation by nonbanks, which are not regulated, in particular may lead to some consumers' getting hurt. I tried to stress that, because banks are regulated, they are more cautious and conservative than nonregulated companies may be in protecting on-line consumers.

Citibank is very aware of the hazards involved in network-based commerce and, therefore, is taking a responsible approach to on-line banking and to banking projects related to the Internet.

Until Internet security issues are resolved, for example, we will no doubt see increased fraud on the Internet, especially involving nonregulated, nonbanking companies.

The report also misconstrued my comments about Citibank's own involvement in electronic banking. I stated that, while Citibank and other companies have lots of ongoing experiments, we all must watch and see what works in the market and then react very quickly with product and service offerings.

My point was to stress that transferring money on the Internet requires a level of security and authentication measures that gives customers assurance and confidence about the parties with whom they are dealing.

Finally, the article incorrectly interpreted my views about electronic cash and on-line transaction fees. I did say that, in the short term, electronic cash may be less appealing to consumers than electronic checks or credit cards; however, this really has nothing to do with consumers' attitudes about transaction fees.

My point was to oppose individual transaction fees for on-line banking activities, because Citibank has learned that the customer relationship is more important than transaction fees.

Colin Crook

Senior technology officer, Citibank/Citicorp New York

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