Ever since the idea of doing business over the Internet was first proposed, futurologists have predicted the death of the local bank branch. Instead of having to trudge down to the branch and queue up every time they wanted to lodge a cheque or check a balance, customers would be able to flip open their laptops or switch on the TV and do their banking over the Internet from the comfort of home.

But although the technology has existed for some time, banks have been slow to provide online services and online banking has yet to become a reality for the vast majority of bank customers.

Other businesses and sectors have been a lot more proactive about exploiting the Internet as a way of selling goods and services, marketing products, purchasing supplies and raw materials, communicating with customers and suppliers, and reaching and developing new markets.

This activity, known as electronic commerce, includes everything from buying books at amazon.com (probably the best known Internet brand) to booking holidays and concert tickets, downloading software, ordering flowers, bidding at online auction houses and comparing prices for everything from cars to mortgages.

Companies that purchase from and sell to other companies, rather than direct to the consumer, have taken e-commerce much further and often handle all their business activities online, including inventory, purchasing, distribution, communications and payments.

Indeed, global e-commerce is growing so fast that most experts predict it will exceed $1 trillion by 2003. One group, Deloitte Consulting, predicts that figure could be reached as early as 2002.

Nevertheless, as a non-tangible service, banking is ideally suited to cyberspace. By enabling customers to check their accounts, transfer funds and pay bills online, banks can reduce their own costs and free up staff to deal with more complex customer queries. But the Internet allows banks to do much more. Banks could use the Internet to market and deliver new products. Consider Bank of Scotland's decision to offer mortgages over the phone in Ireland.

In theory, there is no reason why an Irish bank could not design a service specifically for the Internet, whether mortgages, car loans or credit cards - and sell it elsewhere in Europe.

The potential of Internet-based financial services was grasped early on in the US, not so much by the banks, but by stockbrokers. Americans have more of their savings invested in mutual funds than in bank deposit accounts and US brokers were quick to see the attractions of an online trading service.

Online brokers now control customer assets of $300 billion, equivalent to 10 per cent of total US consumer bank deposits, and leading brokerages like E*Trade and Charles Schwab are among the most recognised brands on the Net. According to US research firm Jupiter Communications, more than 20.3 million US households will trade online by 2003, up from 4.3 million in 1998.

Currently, Internet share dealing is not available in Ireland, although it is hoped a service may be introduced next year.

Several UK institutions, including Halifax, Prudential and Internet service provider Freeserve, are also planning to launch online trading service in 2000. Only 6 per cent of US banks offered online banking in 1998 but that is predicted to rise to 86 per cent by 2003, according to International Data Corporation. Depending on whose forecasts you accept, the number of US households banking online will jump to between 24 million and 32 million by 2003, up from around 7 million last year.

At home, only Bank of Ireland (www.bankofireland.ie) and AIB (www.aib.ie) offer retail Internet banking, although Ulster Bank is expected to launch a service soon.

Neither Bank of Ireland nor AIB will reveal Internet customer numbers. Each allows customers to view account balances and transaction details, pay utility and credit card bills and transfer funds between accounts, essentially the same services the banks provide through their respective telephone banking operations.

The other Irish banks and building societies, like many banks around the world, still only provide product details and service information, or "brochureware" as it is known, on their websites.

Few banks anywhere provide advanced services online such as trust services, asset management or financial modelling. .

Banks everywhere have been slow to utilise the unique features of the Internet to develop new products for new markets.

An exception is Bank of Ireland's recently-announced offshore Internet banking service which, the bank claims, will "revolutionise" offshore banking. Known as Fsharp (www.fsharpbank.com), the online bank will be based in the Isle of Man and will target English-speaking expatriates with a minimum of £15,000 to invest.

Customers will be able to track their bank accounts, make deposits, set up standing orders and invest in a range of offshore funds. Services offered will include fund management from Mercury Asset Management, independent tax advice from KPMG, a debit card from Standard Chartered and a credit card from Bank of Ireland. The service, however, will not be available to either Irish or UK residents.

Another Internet banking operation with Irish connections is Enba, the Dublin-based holding company which plans to offer Internet-only financial services in Europe. Enbas two-pronged strategy is to provide Internet banking services directly to consumers, but also to sell its Internet financial services and products to other businesses which can then market them under their own brand names or on a co-branding basis.

Although its headquarters are in Ireland, Enba has no plans to offer Internet banking services here.

In the US, banks are busy trying to establish online brands and develop new ways to gain and retain online customers.

One idea is the loyalty programme. Broker and investment bank Merrill Lynch (www.ml.com) has announced a scheme where customers can build up loyalty points each time they trade online and either exchange the points for goods at 400 merchants with whom Merrill has negotiated discounts, or use them to offset brokerage fees.

Such schemes may seem somewhat premature for Ireland. But Mr Michael Hennigan, managing director of Finfacts (www.finfacts.com), a financial information website, expects demand for online financial services in Ireland to surge once the Internet can be accessed through television sets.

"In two years, all banks will provide Internet banking, but to differentiate the service will be difficult unless a brand is established. This is where the loyalty programme is very important. The Irish market is also open for an Internet only bank that has a tie-in with a trusted brand such as the likes of Dunnes Stores," Mr Hennigan says.

While there are no plans for an Internet-only bank or a virtual financial loyalty scheme in Ireland, the pace of change in the online world is such that anything is possible. The local bank branch may not disappear but it is likely to change substantially in the years ahead.