Electronic innovations like smart cards and the Internet promise to cut operating costs so dramatically that banks can become more accessible to the poor and other underserved constituencies, bankers told a House subcommittee Thursday.

The trend is already well under way in the form of acccounts that are essentially free if customers use only automated teller machines and other electronic services, said Dudley Nigg, executive vice president of Wells Fargo Bank.

The Internet, which Mr. Nigg said would achieve mass-market proportions within four years, will only accelerate banks' ability to "drive down costs and increase access," he told the House Banking Committee's monetary policy subcommittee, which is exploring new money technologies.

Mr. Nigg was the most forceful of several speakers pointing to a technology-driven revolution in industry economics. In an interview later, he said his points were grounded more in operating advances than in the politics of serving disadvantaged populations but added, "They come together nicely" and "we are highly motivated."

Testifying also on behalf of the Consumer Bankers Association, Mr. Nigg in effect was anticipating lawmakers' concerns about the disenfranchisement of those who cannot afford technology.

"We believe the exact opposite is true because of lowering costs," he said. "These devices will be more and more accessible to consumers."

Mr. Nigg got support from James S. Mahan, chairman of Cardinal Bancshares, Lexington, Ky., and its Internet-only affiliate, Security First Network Bank.

"We passionately believe what we are doing dramatically changes the income statement," he said. Security First, with only eight employees, expects expenses to run less than 1% of assets, well below the typical 3.5% ratio. "Who gets the 2.5 difference? The consumer," Mr. Mahan said.

Even a consumer advocate supported the notion that banks could bring more people into their fold.

James Brown, director of the Center for Consumer Affairs at the University of Wisconsin-Milwaukee, said research he has done for the Tyme electronic banking network indicates many people who have been written off as unbanked "may in fact welcome many aspects of emerging value-transfer mechanisms such as smart cards."

"Less affluent populations really value the anonymity that comes from these transactions," Mr. Brown said. The challenge for banks and legislators is to "assure these services will be available to these populations."

Rep. Michael Castle, R-Del., and other members of his subcommittee reiterated concerns about access issues. (The panel was holding the third in a series of hearings on the "future of money" that began last July.

Rep. Floyd H. Flake of New York, the panel's ranking Democrat, said, "We are going to have to make sure that this is not another technological advance that leaves a lot of people behind."

Mr. Nigg cautioned that electronic banking must gain wide acceptance for costs to drop greatly. His corollary: There should not yet be government regulation.

"For the time being, just sit back, watch developments, and you'll find the banking industry is as interested as you are in a system that is safe, sound, and protective of the consumer's interest," said Frank Wobst, chairman and chief executive officer of Huntington Bancshares in Columbus, Ohio, and chairman of the Bankers Roundtable technology task force.

"There will be time for the government to revisit the laws and regulations applicable to the new systems," he said.

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