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First, there was banking by walking, as into your neighborhood branch. Then there was banking by phone, then banking by personal computer, linking with your nearby branch.

Now comes bank by cyberspace -- banking via the Internet, using institutions which could be based thousands of miles away.

The Office of Thrift Supervision, the nation's official regulator of savings banks and savings and loan associations, has just given its seal of approval to the second Internet financial institution. Atlanta Internet Bank is based in Columbia, S.C., but much of its operations are housed in Atlanta.

AIB joins Security First Network Bank of Atlanta on the federal government's approval list; SFNB was approved by the OTS more than two years ago and began operations in October 1995.

While a number of local and national players are touting their online banking capabilities, AIB and SFNB have pushed the envelope virtually off the chart.

They each have an Atlanta office, but don't look for anything traditional, as in teller windows or employees just waiting to take your deposits or a loan application and give your youngster a lollipop. A "relationship manager" -- a customer service rep -- is there to help answer questions and direct you on how to access the banks via the 'Net. You also have a toll-free number you can call virtually any time and actually talk to a human, not just a detached voice.

"We're looking to bring an entire financial services package to our customers over the Internet," said Eric W. Hartz, SFNB president.

Both Internet banks are well on their way to doing just that. They offer checking and savings accounts, certificates of deposit, money market accounts, automated teller machine cards and personalized checks (for those of us not yet ready to give up entirely the art of scribbling money on rectangular pieces of paper).

SFNB is a bit more advanced than the new Internet bank on the block, offering its own credit card and a stock-tracking product, with self-directed brokerage and insurance products just waiting for additional regulatory approval.

Executives at Atlanta Internet are very close-mouthed these days about their plans, but that's mandated: The firm is looking at doing a public stock offering this week, and the Securities and Exchange Commission dictates that lips be zipped until the offering is on the table.

Offering the standard protection, both banks' deposits are insured by the Federal Deposit Insurance Corp., just like any bank in Buffalo.

But the new institutions do offer something most competitors do not: very competitive -- some might say high -- rates on various deposit products. The reasoning is easy to understand: If you have just one office, few employees and a highly automated system, how much overhead are you carrying? Transaction costs are a fraction of those for a traditional multibranch bank.

"Since we built this bank from the ground up, our overhead is extremely low and we have a much lower cost structure than a traditional bank," SFNB's Hartz said.

Over and above deposit insurance, doing business on the Internet brings with it at least the perception of security problems. Commerce on the Internet is so new that many people are reluctant to use their credit card in cyberspace, let alone trust their banking to bits and bytes.

Again, SFNB and Atlanta Internet Bank are going out of their way to assure potential customers their 'Net banking is as secure as the gold at Fort Knox. Security First says its online transactions are protected by the same system used by the U.S. Department of Defense. Atlanta Internet says the chances of a hacker breaking into its system via a random guess of your very own password is one in 1 trillion.

Security is the OTS's top concern when an Internet bank applies to begin operation, according to Paul Glenn, special counsel to the OTS.

"We want to know how the system is secured," he said. "Encryption (the process of encoding a file) takes care of the problem.

"We also want to know if encryption is working," Glenn said. "We use independent testing by a company knowledgeable in this process to see if, indeed, the system is hackerproof."

Not just hackerproof, how about being operational without the need for a computer -- or software? Security First National does not require a software program to enter its gates.

"You're not handcuffed to a PC with us," Hartz said. "Any device with which you can get on the Internet, like Web-TV, can get to us."

You may have no need to use Internet banks -- you may want nothing to do with the services and products they offer. But do yourself a favor and check out their web sites next time you're cruising the Internet. You may be getting a look at the future of banking.

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