There's a basic flaw in the belief that on-line banking is less expensive for banks than the traditional methods of account processing. Though it is cheaper to process such transactions, on-line banking is an added cost to a bank's profit-and-loss statement. On-line transaction volumes are not large enough (nor will they ever be) to offset traditional processing costs. Banks are carrying the full cost of two systems and saving nothing from the old system.

And here's the rub. Consumers aren't of a mind to pay for either option. They liked it when every deposit account earned money but didn't cost any. Those were the days when a free toaster or a set of china made the difference. And we know how consumers feel these days about ATM fees when a "foreign box" is used. Consumers love the idea of free banking. Even Generation Xers have somehow inherited the idea that banking services should be free. When bankers establish a precedent, it hangs on as if it were regulatory.

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