Most business travelers have experienced the aggravation of petty charges and nickel-and-dime intrusions. An airline imposes a $50 fee for changing flights and $4 for a set of headphones, despite the fact that the traveler has spent $1,200 for a ticket and is a frequent flier. A hotel charges $3.75 for a bag of corn chips taken from the room's minibar and collects a hefty surcharge on local telephone calls.

As irritating as these practices are, banks are making similar mistakes as they attempt to introduce a new era of electronic commerce - and they are risking even more than merely annoying customers.

Nickel-and-dime fees could leave banks vulnerable to smarter, more agile competitors in the race to establish standards in on-line personal finance.

If banks are to succeed in this new environment, they must leave behind the traditions and habits of the past and understand that electronic commerce demands a totally different mind-set and business model.

For example, many banks charge customers monthly fees of $7 to $13 for the privilege of banking from home. In other words, customers who are fed up with the poor levels of service in bank branches must now pay additional charges so that banks can shut down branches and cut labor costs.

Banks must understand that electronic customers are a distinctly different breed from the mass market. The on-line user of financial services tends to be demanding, impatient, and savvy. Hitting these people with petty fees and charges is a guaranteed way to earn their resentment, not their business.

These customers are not stupid. They realize that an on-line "virtual bank" is dramatically cheaper to run than a brick-and-mortar institution. If a basic transaction by a teller costs a bank $1, and an automated teller machine withdrawal costs 25 cents, then an electronic transaction from home costs the bank just pennies. A customer expects those savings to be passed along.

The operating model that succeeds in electronic commerce is to present the lowest possible cost of entry to users - giving away the software, if necessary, and generating high-volume traffic. Computer Associates used this strategy to bring its Simply Money personal finance software from nowhere to rank second behind Intuit's Quicken.

Similarly, Netscape, which became an instant business legend when it went public earlier this year, began as a free download from the World Wide Web.

Unfortunately, many banks are taking the approach that has alienated so many branch customers and transplanting it into electronic commerce.

Recently, for example, an affluent customer of a San Francisco bank removed all funds from a branch when the bank denied his request to have monthly fees for home electronic banking waived. His request was turned down because, according to the branch personnel, "Those are the rules."

Moreover, banks have missed an essential truth about home banking: Nobody wants to do it.

No one leaves the dinner table, flushed with enthusiasm for turning on the computer and balancing the checkbook. Personal financial record keeping is tedious work that people do only because they have to.

If a bank tries to milk small profits from what people already hate doing, it is only creating a deeper disincentive.

The result? Inertia, as customers avoid home banking and stay with the status quo. Then banks claim that the electronic market is mostly hype, and the cycle of defeat continues.

To be sure, there are smart bankers who are playing their digital cards astutely.

Citicorp's "Citibank on the PC" more than doubled its number of users between April and July 1995, while competing electronic banks had little or no growth. The reason for Citicorp's surge? Its service is free - no basic charges, no additional fees.

This new digital era requires corporate executives to move beyond the old paradigm.

For the most part, banking executives are still caught in a mind-set in which fee-based services are a dependable source of easy profits. By clinging to this attitude, they are risking the loss of an entire emerging generation of on-line customers.

Mr. Wallace is president of Wallace & Co., a management consulting firm based in Berkeley, Calif.

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