Cheap internet access, and high home computer ownership in US households, has fuelled the growth of electronic banking there.
UK banks have been slower to see the value of the internet. Take-up has been driven by banks with less presence on the high street, including the Royal Bank of Scotland and the Co-operative Bank, as well as the Nationwide Building Society. Of the big four, only Barclays has a full internet banking service available to its customers.
Most banks here offer a limited range of services via their internet sites. Typically, customers can check balances online, but they can only pay bills if they arrange it first over the phone. They can review standing orders, but not set them up. They can transfer money, but usually only to accounts within the same bank.
The features that banks offer are the ones people use most of the time. However, the limitations are restrictive, especially to people who manage their finances in an active way.
However, last week Citibank launched its internet banking service in the UK. Citibank's previous PC banking service was one of the more comprehensive on the market, especially because of its support for money transfer and foreign currency transactions.
The internet version - which will gradually replace the PC banking product - takes this a step further. Citibank customers can use the web site to monitor savings accounts in 15 different currencies. They can transfer money to other Citibank account holders in Belgium, France, Germany, Greece, Luxemburg and Spain, and to accounts at any bank within the United Kingdom.
The bank plans to add more international options, and euro, US dollar and sterling account management and payment services over the next few months. Citibank also provides free telephone support, and a site that works for both Mac and PC users, or for people with Netscape or Microsoft browser software. It is currently giving away free internet accounts through a deal with VirginNet.
Citibank's internet operations reflect its approach as a bank. Effectively, it is branch-less, so the internet is a vital way for it to expand its operations. It is also a bank with a niche market: relatively well-paid people who travel frequently or who may have work or personal financial interests abroad. Access to a PC, at home or at work, is an issue for this group.
Citibank is also drawing on its background as a US-based bank. "We have more that 10 years experience with online banking which we built into this product and service," explains Alyson West, acting marketing director at Citibank in London. "We are committed to internet banking - giving customers features that they want and, therefore, making it easier and faster for customers to bank over the web."
Analysis in the United States shows that banks can save substantial amounts of money by persuading customers to use the internet instead of the branch networks.
Here, banks have been more sceptical, pointing to customer convenience rather than cost as the motive.
"Citibank is committed to the internet as another important banking channel that gives our customers the means to access and manage their finances - how and when they wish," says Ms West. "Internet banking adds another string to their bow when they are trying to save time in their busy schedules."
Citibank is not for everyone. The bank requires customers to prove a household income of pounds 30,000 a year.
The high street banks will not see customers defecting in droves, however good Citibank's package may be.
However, they would be unwise to ignore Citibank's web initiative altogether. Other banks, both in the US and Europe, will be watching its progress with interest.
They may well come to see the internet as a way to gain a foothold in the lucrative UK banking market.
Contacts: Citibank home page: www.citibank.co.ukReuse content