SAO PAULO, Brazil - Candido Leonelli, head of the No. 1 Internet banking service in Brazil, faced a problem. How could he achieve mass adoption of online banking in a country where only 3.3% of the population has Internet access? His solution: help the bank's customers buy computers.

Banco Bradesco SA has 1.2 million Web banking customers. To boost that number, this month it began offering computers - bundled with free Internet access - to the rest of its nine million customers and its employees. They can pay for the machines in 24 monthly installments of 80 reais (about $43) each. Not bad for a country where monthly interest rates on credit cards are nearly 12%.

Bradesco is not the only bank here helping people get on the Web. Uniao de Bancos Brasileiros, or Unibanco, offers its customers free Internet access. Banco Itau recently agreed to buy a 12% stake in America Online Inc.'s Latin American unit, and will offer its customers a limited amount of free time on AOL. Bradesco is offering free Web access as a loyalty product, giving customers who open a checking account 20 hours, for example.

While U.S. banks pitch the convenience of the Web, those in Brazil are starting from a different handicap, and their efforts may hold some lessons. Most Americans have banks and access to computers, so when U.S. institutions reach out to the unbanked, they tend to be fulfilling Community Reinvestment Act duties. In Brazil, it's more of an imperative than an obligation or a frill.

A few banks here are clearly poised to take the lead in moving the country's estimated 46 million citizens (out of a total population of 170 million) with bank accounts to the Internet, and are showing more creativity than most U.S. banks.

"Since the time of hyperinflation, banks had to develop their own systems here," said Daniel Shavitt, e-commerce project coordinator at Scopus, an Internet technology company owned by Bradesco, Brazil's largest bank. "Because inflation required fast systems, banks had to put a lot of money into their systems, and this helped with the Internet."

Boston Consulting Group says that by 2005 there will be 40 million Internet users in Brazil. Bradesco says it has "the first-mover advantage" in the Brazilian banking industry's race to serve these people.

In many respects, Bradesco's Internet innovation has outpaced some of the most advanced banks in the world. Bradesco, which in 1996 became the third bank in the world to offer an online banking service, has turned its Web site into a portal where customers can connect to 300 merchants, invest in stocks and mutual funds, conduct business-to-business transactions, and apply for credit cards.

Bradesco is also making its services available through cellular phones and Web TV, and is installing kiosks in its 2,500 branches so that people who do not own a computer can shop online.

"This is a war where you can't be just a sniper, you need an army and a navy too," said Mr. Leonelli, director of special projects at Bradesco. "We may have competitors in certain niches, but no one is offering the scope of products that we are."

In the April issue of Institutional Investor, the 53-year-old Mr. Leonelli was 35th in a ranking of the world's 40 most influential people in online finance. "That's because of Bradesco," he said.

Only one other South American made the magazine's list: Wenceslao Casares from Argentina, who founded the financial portal recently acquired by Banco Santander Central Hispano.

In the past four months Bradesco has distributed 11,000 computers to its employees, and is financing them at 0.95% interest per month. Mr. Leonelli said it is important for Bradesco's employees to bank online, so they will be "apostles" for the service.

Bradesco has worked hard to integrate Brazilian culture into its Web offering. Nearly every bill has to be paid at a bank, and no one sends bill payments by mail. To avoid the two-hour waits at branches, most large companies hire messengers to take their employees' bill payments to the bank for them.

Because Brazilians are used to this system, Bradesco allows them to shop online and then print a bill from the computer. Bradesco guarantees payment to the merchant.

"We developed the Brazilian solution for e-commerce," Mr. Leonelli said. "We wanted to democratize e-commerce. This way, even the unbanked can shop online."

Though analysts cite Bradesco as Brazil's leader in Internet banking, competitors including Itau - which has more than 500,000 Internet customers - and Unibanco - which has 150,000 - are making strides.

Itau offers many of the same features Bradesco does, but it has yet to set up its shopping portal and business-to-business platform. The company says both are in the works.

Unibanco made headlines in September when it launched e-card, a MasterCard product specifically designed for Internet shopping. In a rare type of guarantee, Unibanco promises its cardholders that it will pay for any fraudulent charges.

The product has given Unibanco an extra advantage: a database of online shoppers. Jose Garcia-Cantera, an analyst at Salomon Smith Barney, said, "Since the e-card is only for Internet purchases, Unibanco has an excellent idea of its customers' shopping habits and spending patterns, and this should prove to be valuable information if the bank launches a shopping portal."

Though e-commerce advertisements blanket billboards across Sao Paulo and companies such as Scopus have been flooded with requests to design online stores, industry experts say few purchases are actually being made.

"Brazilians are not yet shopping, because of the fear of putting their card number online," said Mr. Shavitt of Scopus.

Scopus, which in 1998 put the Secure Electronic Transaction protocol on Bradesco's Web site, this month launched a service called Payment Facil (Easy Payment). It incorporates some SET technology and is as secure as SET but does not use an electronic wallet, which Mr. Shavitt said was not well-received by consumers. To thwart would-be hackers, the system does not send credit card numbers to merchant sites, and it uses cryptography linking customer, merchant, and bank.

"We used the ideas of SET - which are very good - and reduced the costs," Mr. Shavitt said. "We don't believe SET will become the standard here."

Bradesco said it guarantees transactions made with Payment Facil. Scopus said it would start selling the protocol to other banks.

Mr. Leonelli said he is not worried that Web banks here will grab market away from brick-and-mortar banks, as is happening in the United States.

"In Brazil to open an account, you need lots of papers; you need bricks and clicks," he said. "I believe there is no substitution for human contact. You still need face-to-face contact to create loyalty with your consumers."

Bradesco's nationwide branch network is a key asset in its Internet plans, Mr. Leonelli said. "Bradesco is a huge brand. How can a newcomer compete with our brand?"

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