CITIBANK in Hong Kong has set a target to cut the costs of transactions by reducing the proportion of transactions done in branches from 40 per cent of the total to just 15 per cent over the next three years. Keeping the customers away from the branches could reduce the cost per transaction by as much as 70 per cent, as Citibank estimates branch-based transactions cost the banks 10 times as much as those done at an ATM, over the phone or via the Internet. William Lo Wing-yan, chief executive for consumer banking at Citibank in Hong Kong, said 'We want 85 per cent of our customer transactions to go through remote channels, because that is much more cost effective.' Citibank will introduce a new type of account in the first quarter of next year in which customers who do not use branches will be given a higher rate of interest on deposits. When transactions are made through the branch, those customers will be charged a fee - possibly $20. The bank recently said its target of attracting 15,000 to 20,000 new customers, many of them from lower-income brackets than its current customers. Many of those customers may be signed up on the new accounts. The move could make Citibank the first Hong Kong bank to introduce charges for transactions. Others have also considered charging and are expected to begin introducing charges in the next few years. Hongkong Bank said it had reviewed the situation and expected to start charging for transactions at some point. 'It's something we are reviewing on an ongoing basis,' said Eric Tai, head of personal banking development at Hongkong Bank. 'We know what we want to do. We decided it wasn't timely to do it at the moment.' Internet banking offers the cheapest means of providing banking services, with US experts calculating the cost of a transaction through the Internet at 13 US cents, compared to 54 US cents over the phone and US$1.08 in a bank. Citibank has seen its recently-launched Web-based service take off faster than expected. It found 5,000 of its customers were using the service on a regular basis within the first month - it's target for the first three months. Citibank is already ahead of many of its competitors in keeping its customers out of the branches. Giles Brennand, head of the financial institutions practice at AT Kearney, said just over 50 per cent of all bank transactions in Hong Kong were done outside branches, although at many smaller banks the percentage was as low as 20 per cent. Citibank has already made a start towards signing up 15,000 new customers. The bank began waiving its requirement for account holders to maintain a balance of $30,000 for university students in October of this year. Mr Lo said more than 7,000 had signed up within the first month. The bank currently has around 800,000 customers, of which 150,000 hold current accounts.