And for good reason: It costs anywhere from $25,000 to $350,000 and up for banks to purchase the software needed to provide Internet-based services, a wide price range for the same basic service, bankers say. That doesn't include the costs of maintaining a continuous T1 Internet connection - another $18,000 a year or so - or the costs of processing the transaction.

In fact, right now, "only about 130 U.S. banks - about 20 percent - allow their customers to use the Internet to check account balances or transfer funds between accounts," says Jim Bruene, editor and publisher of Online Banking Report, a Seattle newsletter that tracks on-line banking trends.

According to the Federal Deposit Insurance Corp., there were 272 FDIC-insured commercial banks operating in Florida as of June 30, 1997, the latest period for which figures are available. Of that number, 156 had fewer than $100 million in assets, while 98 had assets between $100 million and $1 billion, and 18 had assets of more than $1 billion.

In Florida, two national banks - NationsBank and First Union - now dominate the banking scene with 45 percent of all bank deposits in the state as of June 30, 1997, the FDIC says. (The NationsBank total includes the market share previously owned by Barnett Banks.) That leaves 300 or so banks, thrifts and savings banks in Florida to split the remainder.

Best-guess estimates are that only about 20 small Florida-based banks now offer Internet banking, according to Jeffrey Grady, executive director of the Community Bankers of Florida. "The little guys can't afford to make mistakes with technology," says Grady. "It's an enormously large investment for a small bank, and to have it not work - or worse yet, have their customers not use it," would be a disaster, he says.

Edward Blodgett, network administrator for First Federal Savings Bank of Florida, based in Live Oak, agrees. "The expense and security required is not justified for Internet access," he says. "One other reason: the banking software that we use does not support Internet technology, although the company is planning to support Internet technology in the future."

"Our bank serves a retirement area," explains Steven Kurtz, president and CEO of First Federal Savings Bank of Lake County. "While we have an interest in following developments [in Internet banking], we don't feel like we have a gun to our head to move forward quickly."

"Our bank is very interested in Internet banking, and we want to be able to provide on-line access to accounts for our business customers only," says Shellie Schmidt, senior vice president of Fidelity Federal in West Palm Beach. "There is a lot of demand" from business customers for Internet banking, she adds.

To get a better idea of what small banks face, Digital Florida took a look at two community banks and one small Florida thrift in locations across the state. Here's what we found.

Alliance Bank

Orlando's Alliance Bank may have only $17 million in assets and one location, but it has offered full Internet banking since August 1997, when the de novo bank opened its doors in a highly competitive banking market.

"Part of our strategy was to embrace as much of the technology as we could that was cost-effective in order to be on an even playing field with the mega-banks, who have most of the market share here," says Bill Beiler, the bank's president and CEO. "Of course, those are the customers we would like to have here."

Currently, the bank offers its customers the ability to use the Internet to get balance information, checking account activity, transfers between accounts, open accounts, and check out all the bank's other products and services. The service is free, although the bank may consider adding a charge once an electronic bill-paying module is implemented later this year.

So far, only a handful of accounts have been opened as a result of queries from the bank's Web site, Beiler says. In fact, most of the queries don't come from Florida residents, but from other states: the first account opened was the result of a query from a Vermont resident who winters in Orlando. A recent report on the bank's Web traffic shows queries from a dozen or so other countries, including Australia, Brazil, Canada, Colombia, Czechoslovakia and Japan.

Enterprise Bank

West Palm Beach-based Enterprise Bank, with $115 million in assets, is currently beta-testing its Internet banking system and plans to roll out full Internet banking later this year, says Bill Decker, co-chairman, president and CEO.

For Enterprise, which has spent upward of $100,000 on its Internet banking system, the motivation to offer Internet banking is not to keep up with service offerings by competitors, but to save money on banking transactions, Decker says. It costs the bank $1 or more to process a transaction with a human teller in a branch, compared with $0.75 per transaction for telephone banking using a keypad and a touch-tone phone. ATM transactions cost between $0.25 and $0.30 cents.

That compares with $0.01 to $0.05 for an Internet transaction.

Eventually, Decker believes, the Internet will replace bricks-and-mortar branches.

Of course, not everyone agrees.

First Federal S&L Association

of Putnam County

Palatka-based First Federal of Putnam County, with $185 million in assets, has been offering Internet banking since July 1997 through a proprietary software package. Customers can opt either for an Internet connection or a toll-free number that connects directly to a secure server maintained on First Federal's behalf, according to Mike Riddick, vice president and CFO.

In addition to Internet banking, the bank's Web site offers information on interest rates for savings accounts, mortgages and consumer loans, as well as branch information and links of local interest.

First Federal took the plunge to keep up with the competition. "We saw that our large competitors - First Union, Sun and Barnett - were trying to get to market with a product along this line, and we felt to protect our market share that we needed to offer other delivery systems," Riddick says. "Electronic delivery is a delivery system that has gained acceptance by a wider portion of the market, and we wanted to make sure we could stay up-to-date." So far, the bank has spent at least $20,000 in developing the required interfaces for Internet banking.

While there won't be a need for as many branch locations, there will always be a need for some branches, Riddick says. "We're still going to see consumers who want to be face-to-face with someone, particularly when it comes to things like applying for a loan," which can't be done on-line because of federal banking regulations that require an original signature on a document.

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