The indifferent performance of virtual banks in converting the public to on-line banking would seem to hand the advantage to their traditional competitors.
When people write a check or take cash out of an automatic-teller machine, few of them stop
to think whether the computer system handling their transaction might crash and their savings
disappear. But when customers of Internet banks sit at their PCs and move thousands of
dollars between accounts, they must wonder, if only for a moment, if such a catastrophe could
occur. So far, only the rare individual entrusts all of his or her financial affairs to a virtual bank
(Exhibit 1). Given these reservations, it would seem that the solid, reliable image enjoyed by
established banks should give them a special opportunity to lead in the on-line world. Have
they taken it?
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