A large U.S. bank recently reported that 6% of its checking account households had signed up for its Internet banking program.

When I checked the pricing, I learned that opening accounts, transferring funds between accounts, and downloading transactions are all free.

If, however, one wants to pay someone electronically, the fee is $5.95 a month. And this is not uncommon at interactive banking sites.

During the Bank Administration Institute Retail Delivery Conference in December, speaker after speaker insisted that banks must use technology to deliver fast, easy, low-cost services, or risk losing customers to rivals such as Microsoft, State Farm Insurance, and Charles Schwab. One banker said, "If we let these companies take over our business, then we are dead."

Recent statistics from the American Bankers Association and other studies show that Internet transactions cost about a penny each. That compares with unit costs of $1.07 in a branch, 73 cents by mail, 54 cents by telephone, and 27 cents at an automated teller machine.

What can we make of all this?

If I walk into my branch, I am costing the bank, on average, a little over a dollar per transaction. They are now encouraging me to do these transactions on the Web, to lower their cost and increase my convenience. This is a reasonable value proposition.

But if I want to pay someone else from my account, then I must pay a fee for the Web convenience.

I could just write a check-I get checks free from my bank-and enjoy that little bit of float while the check clears. It would cost me the price of a postage stamp.

Better yet, I might sometimes pay bills using a credit card so that I can add to my frequent flier mileage. Again, it comes at the cost of first- class postage.

To me, these paper-based options seem more valuable.

It seems to me that these banks providing "fast, easy, low-cost service" through the new electronic channel have not yet figured out how to use the technology to enhance the value proposition. In the bill payment example, it seems that the customer would think the bank not only wants to lower its cost, but at the same time wants to raise the customer's cost.

Until bank marketers are able to establish a fair value proposition for all their Internet services, banks will be in danger of losing their customers.

It is true enough. For an on-line customer, the Microsofts, State Farms, and Schwabs are literally only a click away.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.