The euphoria that surrounded pure Internet banks when they first burst on the scene in the mid-1990s is dissipating fast. Many virtual organizations are discovering that the Internet is not a panacea for financial services, but rather a wedge of the pie they must serve to their customers -at least while they wait for the Net generation to grow up. In fact, Web-only institutions have captured only 1% to 2% of the roughly 19 million regular online banking customer market.

Last month, BTN reported on New York-based Citigroup Inc.'s decision to collapse Citi f/i, its Internet-only bank, and Direct Access, its online banking program, into a single service that will deliver service through a mix of electronic and physical channels. Other major institutions, such as Bank of America Corp., Charlotte, NC, and Wells Fargo & Co., San Francisco, chose from the beginning not to offer a standalone Internet service, pursuing instead what has come to be known as a "clicks and bricks" strategy.

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