on-line banking, in which transaction costs average 10 cents or less -- more than $4 less than it costs to conduct a transaction in person.

On-line mortgage lending just may be the killer application banks have been looking for. It is still in its infancy, however. In 1998, on-line originations -- loans initiated by consumers, brokers, or real estate agents over an electronic application -- accounted for just 0.5% of the $1.5 trillion in mortgage originations in the United States.

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