Strategic decisions must now be made at National Australia Bank about its future development in the Irish market with the question mark hanging over a possible bid for Ulster Bank.

Reaction in some quarters to speculation that the Australian group may not bid for Ulster Bank involved questioning the bank's commitment to Ireland. If the bank ignores this opportunity to make the scale expansion it has said it wants, would this not amount to clear evidence that it is not serious about remaining in the Irish market, the argument goes.

And with a damaged brand after recent revelations and enquiries and the failure so far to achieve significant market share, there would be little surprise if the "for sale" sign went up at National Irish Bank.

But that reaction could be too simplistic. A decision not to bid for Ulster could reflect a fundamental assessment by NAB of the likely direction of the Irish market and of worldwide developments in the delivery of banking services.

Could NAB have judged its existing branch structure in the Republic as adequate or almost adequate given expected changes in the delivery of banking services?

If this is the case, then the bank must be making plans to further develop its telephone banking service, to initiate Internet banking and to introduce service and delivery initiatives for special niche sectors.

That would mirror the development of the bank in Australia - innovative use of new technology for low-cost delivery of services to customers. The bank here could also be examining a link with a supermarket or other retail network to provide access to more customers.

There is now a strong argument that the bricks-and-mortar approach to building a banking business has had its day. Technology is being constantly improved and can be used to deliver products and services to customers at far lower costs than the traditional branch structure.

Bank of Scotland's arrival in the Irish mortgage market is evidence of how a low-cost telephone-based operation can offer lower price products and put other market players under pressure.

There are, of course, other factors which could make NAB decide not to bid for Ulster: regulatory approval for the takeover of Ulster's operations would be unlikely given that it is already the largest bank in Northern Ireland with Northern Bank. And, even if NAB saw Ulster as an opportunity to acquire a customer base - as opposed to a branch network - it would have to have some concerns about how many Ulster customers would remain with the new owner - given the distinct differences in culture between the two banks.