The electronic banking market has about five million active subscribers, says "Electronic Commerce Services: Changing Opportunities and Risks," a recent Lazard Freres & Co. report. Some 1.1 million transmit transactions through the Internet, and the rest through direct telecom interface. The number of active subscribers is expected to grow at more than 40 percent annually over the next three years. The report adds that the Booz-Allen projection that 16 percent of U.S. households will be transacting some banking through the Internet in 2000 is not out of the realm of reality, considering marketing initiatives underway in this area.

The report says that the monthly cost per subscriber to banks is $4 to $5, and should fall with greater scale. Banks have been confused about pricing this service. Some give it away to lure and keep depositors; others charge fees based on use. This confusion has inhibited growth. More institutions are viewing electronic banking as an integral part of their consumer marketing strategies.

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