Though Internet-based financial services are all the rage, many financial institutions still hesitate to make the leap to cyberspace.

This reluctance, particularly strong among community bankers, is said to be born not of fear, but of pragmatism.

"We are a small bank, and we don't like to spend a lot of money on technology until it is proven," said Michael Macielag, president and chief executive officer of Chesapeake Bank and Trust Co. in Chestertown, Md.

Mr. Macielag said the past is littered with technologies that took decades to mature and pay off, and his $65 million-asset bank is in no rush to commit to a delivery mechanism for which he sees limited demand. For his customers, "hand-holding is more important than technology," he said.

Mr. Macielag is far from alone in taking a wait-and-see approach. About four out of 10 community bankers responding to a recent survey by Grant Thornton LLP said they had no plans to offer on-line banking.

"Community banks don't have unlimited budgets, so they must set priorities," said Diane Casey, national director of financial services with Grant Thornton, a Chicago-based accounting and consulting firm. "They may want to wait a couple of years, and maybe they won't miss anything."

Ms. Casey acknowledged that most community banks were at least considering building Web sites. And the number of on-line banks is likely to rise as the price of Web-related outsourcing support drops.

But given that no more than 3% to 6% of U.S. households use on-line banking, according to most market research, it only makes sense for many smaller banks to hold off. "This is the technology of the future, but are consumers clamoring for this?" Ms. Casey asked.

None of the bankers interviewed for this article could say for certain whether they had lost customers because of a lack of Internet services. Several said they expected customer demand to rise over time, eventually reaching a point that would necessitate a Web site.

Jack Goldstein, president and CEO of First Bank of Frederick, Md., is openly skeptical of the Internet. He said that for many banks, Web sites are more about promoting a brand than providing services. Until it becomes easier and more common for banks to provide transactional services, he said, he sees "no reason to spend the money."

Jeffrey L. Gerhart, president of First National Bank of Newman Grove, Neb., said it is "waiting and watching" Internet banking trends and hoping to learn from other institutions' mistakes. "We are still in the early stages of Internet development. In another 10 years we might see this as a horse-and-buggy approach."

But nonbanker experts warn of hazards in waiting on the sidelines too long.

A bank cannot ignore the Internet as a delivery channel "any more than it could ignore the face-to-face channel," said Bill Doyle, director of money and technology strategies at Forrester Research Inc. in Cambridge, Mass. "A community bank could choose not to have a telephone channel, but that would be nuts. The Internet is a bona fide channel just like the others."

James M. Shelton, executive director of the Online Banking Association in Corte Madera, Calif., said, "Being on the Web is like having a listing in the Yellow Pages. At some point everyone will have a presence, even if it is just a brochure."

"When I see evidence of banks' generating revenue from Web sites, I will have one," Mr. Macielag said. Until then, he said, his bank will continue to focus on things that reinforce personal relationships.

In one recent instance, Mr. Macielag sent a pound of smoked salmon and a personal note to each of his 100 best customers. "For the large-dollar depositor, that is more important than the technology right now," he said.

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