A report released recently by Deloitte Touche Tohmatsu International predicted that half the branches and tens of thousands of jobs will disappear in retail banking over the next five to 10 years.

"Across the globe, retail banking is extremely inefficient, due in part to a legacy of decades of protective regulation," said John Harrison, head of Deloitte Touche Tohmatsu International's banking services group.

"Deregulation and a real improvement in the possibilities of implementing ultralarge-scale automation have created a scenario for change like that experienced by the telecommunications and airline industries," Mr. Harrison added.

The study, titled "The Future of Retail Banking - A Global Industry Perspective," noted that in countries like the United States and the United Kingdom, where deregulation is in full swing, new entrants into the market have an advantage over existing players and are putting large banks on the defensive.

"It would not be at all surprising to see the disappearance, most likely through merger, of one or several major banks in these countries," Mr. Harrison wrote.

The report noted that the rise of so-called digital money, including telephone banking, automated teller machines, and magnetic stripe cards, is eliminating the need for brick-and-mortar branches.

As a result, the report noted, the skills needed to develop and operate digital money systems will move away from banks to electronic hardware and software companies.

"The effect of this will be profound as branches lose their monopoly as a place where products are both sold and serviced and money is moved," the report noted.

"The traditional role of the branch will collapse and more innovative businesses such as Microsoft will move in to create a new level and range of customer-driven services."

Concern among bankers about future competition from electronic software manufacturers has been growing and was a topic of discussion at last week's International Monetary Conference in Seattle.

But William H. Gates 3d, chairman of Microsoft, the leading supplier of computer software in the United States, denied that his company is planning to compete directly with banks in supplying financial services.

"In no way will we be a competitor to banks," Mr. Gates said at a press conference. "What we develop is technology that enables them to deliver products to their customers."

However, bankers at the same conference disagreed. They observed that banks are already turning to software manufacturers to purchase off-the- shelf programs they previously would have developed in-house. They added that it is only a matter of time before hardware and software suppliers begin directly competing with banks, weakening their traditional monopoly.

"There will be a shift from providing software to providing service," said John Reed, chairman of Citicorp. "Software will allow people to transact within the marketplace, and there won't be much need for intermediaries."

Banking, Mr. Reed added, "will become an application code in a computer."

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